Canadian Dollar Flat After Better-Than-Expected Inflation, Traders Eye Retail Sales

The  Canadian dollar is looking for  direction on  Monday after the  government reported better-than-expected inflation numbers. Investors will now look ahead to  retail sales data later this week, as  well as  keep a  close eye on  the  US central bank head’s annual speech at  Jackson Hole.

On  Friday, Statistics Canada reported that the  July consumer price index (CPI) advanced 3.0%, beating market forecasts of  2.5%. The  government agency further noted that the  Core CPI climbed 1.5%, also beating initial projections of  1.3%. Analysts were disappointed when it was determined the  Core CPI reading was below the  Bank of  Canada (BOC)’s 3% range.
Canadian retail sales data for  July will be announced on  Wednesday. Financial experts do think that it will be 1.1%, much lower than May’s impressive gain of  2.0%. That said, anything weaker than the  market forecast could send the  loonie lower.
Without any significant economic reports coming out this week, either in  Canada or  the  US, investors will pay attention to  Federal Reserve Chair Jerome Powell’s speech on  Friday in  Jackson Hole. The  annual event could shed light on  the  central bank’s pace of  increasing interest rates. Right now, the  market is penciling in  a  rate hike in  September and  in  December.
The  Canadian dollar did gain some support from rising energy prices. September West Texas Intermediate (WTI) crude oil futures tacked on  $0.33, or  0.50%, to  $66.29 per barrel on  the  New York Mercantile Exchange.
While the  general consensus is that the  worst of  the  financial and  currency crisis in  Turkey is over, investors are still playing it safe. Many traders are diving into the  US dollar, which has been viewed as  a  safe haven asset in  recent months. The  greenback took a  breather as  the  US Dollar Index slipped 0.18% to  95.96.
In  other geopolitical developments, US and  Chinese officials will hold trade talks this week. The  negotiations could extend clues to  whether the  world’s two largest economies will ease tensions or  escalate trade spats. This is important for  Canada because it exports many commodities and  maintains a  current account deficit, so if capital slows or  the  flow of  trade is impacted, then its economy might contract.
The  USD/CAD currency pair jumped 0.02% to  1.3063, from an  opening of  1.3062, at  17:38 GMT on  Monday. It has been a  different story for  the  EUR/CAD as  the  currency pair rose 0.21% to  1.4970, from an  opening of  1.4939.

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