Canadian Dollar Consolidates as Traders Pause Ahead of Data
February 20, 2014
By David George-Cosh
The Canadian dollar was slightly lower early Thursday, consolidating within a narrow range during the overnight session as traders shrugged off economic data from the U.S. and turned their focus on domestic inflation data on Friday.
The U.S. dollar was recently at C$1.1090 early Thursday, from C$1.1079 late Wednesday, according to data provider CQG.
After taking its biggest one-day loss since December 2011 on Wednesday in the wake of disappointing wholesale sales figures, the Canadian currency has quieted down as traders begin to lock in bets ahead of Friday’s release of inflation and retail sales numbers.
While inflation figures have been rather subdued in Canada, Friday’s release will be closely watched to gauge whether the Bank of Canada sees any improvement in inflation and the economy, which could prompt it to begin to withdraw from its dovish stance.
Some observers, however, believe Canada’s inflation will be soft for quite some time.
<b>”With the weakness in the wholesale trade numbers we saw yesterday, there is little to suggest an upside surprise is in the cards for tomorrow,” said Scott Smith, senior market analyst at Cambridge Mercantile Group.</b>
Economists expect both core and headline inflation to come in at 1.3% in January on an annualized basis, below the Bank of Canada’s 2% target.
The extreme weather conditions in Toronto are likely to have caused a hit to both inflation and retail sales figures, and should push the U.S. dollar firmly above the C$1.11 level, according to Velocity Trade.