The Canadian dollar oscillated after the nation’s statistics office reported that the economy expanded much slower than forecasted in April, lowering speculation that the central bank may hike interest rates soon.
The loonie remained slightly unchanged at C$1.0666 per U.S. dollar as of 10:54 a.m. local time. The currency had earlier declined by up to 0.3 percent after earlier surging to C$1.0658, the most since January 7. The Canadian dollar has accelerated from the weakest level in four and half years of C$1.1279 that it touched on March 20th.
The economy advanced 2.1 percent in April from 12 months earlier, reported Statistics Canada on Monday. Economists surveyed by Bloomberg News had forecasted a growth of 2.3 percent. The economy grew 0.1 percent in April from a month earlier, same as the previous period’s month-to-month advance.
“It’ll probably result in some profit-taking on the Canadian dollar’s recent rally,” Omer Esiner, a Washington, D.C.-based chief market analyst at Commonwealth Foreign Exchange Inc., told Bloomberg. “Given the increasing signs of mounting pressure on the Canadian dollar, the GDP number doesn’t necessarily mean a meaningful move lower.”
The data on April economic growth backs the Bank of Canada’s view that the surging inflation is temporary, not a sign that the economy is gaining momentum. This follows a report early this June that showed that consumer prices in May exceeded the central bank’s goal of 2 percent for the first time in two years.
Statistics Canada had earlier reported on June 20 that its consumer price index surged 2.3 percent from a year ago. This was the first time inflation shot past the Bank of Canada’s target of 2 percent since February 2012. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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