USD-CAD Pair Makes Significant Jump Before Becoming Stable. The consumer price index or CPI in Canada for May 2018 was released, and it was found to be much lower than anticipated. The CPI was at an increase of 2.2%, lower than the 2.6% that had been anticipated. This led to the Canadian dollar making a sudden shift in value versus the American dollar.
The jump in the value caused the American dollar to be stronger in value than the Canadian dollar. But at the same time, the value has stabilized for the most part. This led to concerns over how well the Canadian dollar can work on the market and if the economy in the country could be at risk of harm very soon.
Detailed on the Change
The USD-CAD pair showed a significant boost Friday afternoon as a result of this CPI announcement. The USD-CAD value was listed at around $1.328 beforehand. The total went up to nearly $1.335 for a period of time before moving back to the $1.328 value.
Trading on the pair became consistent and stable on Saturday. The value of the currency stuck at around the same value for the most part with brief peaks and valleys lasting for an hour or two on average. The pair was trading at around $1.327 around the end of Saturday.
The pair had been growing in value to where the American dollar is being worth more on average. The pair was around $1.28 at the start of June. The general value of the pair has been at the same range for the most part in the past few years. It has not been since 2015 that the value of the pair went down to under $1.20. The change in the market suggests that while Americans can get more out of their money while in Canada, this is not necessarily the case for Canadians in the United States.
CAD Issues
The sudden shift in the pair value came as the Canadian dollar has been struggling in recent time. CAD has been impacted by concerns surrounding NAFTA negotiations. The threat of global trade war led by the United States has also made it harder for the Canadian dollar to grow in value.
Canada’s large economy is heavily influenced by the retail economy. The drop in the anticipated CPI is a sign that Canadians might not be as keen on spending now as they used to be.
The potential for the Bank of Canada to raise rates is expected to decline as a result of the development. This in turn may lead to the Canadian dollar becoming weaker in the future, thus impacting how the American dollar relates to the Canadian one.
Other Details
Canadian retail sales went down by 1.2% in May. This was less than the 0% rate that was expected. This measure is based on a month-over-month listing when compared with May of last year. The decline suggests that there are concerns in the Canadian retail market, particularly with Sears pulling out of the country. This may keep the Canadian dollar from being worthwhile in some investments on the forex market.
