Canadian Dollar Rallies on Inflation Report, Crashes on BoC Rate Decision

The Canadian dollar today rallied against its US counterpart in the first half of today’s session driving the USD/CAD to its daily lows boosted by in-line inflation figures. However, the currency pair quickly reversed course after the Bank of  Canada announced its rate decision, which was interpreted as being very dovish.
The  USD/CAD currency pair today fell to  a  daily low of  1.3036 in  the  early American session before spiking to  a  high of  1.3140 two hours later following the  BoC rate decision.
The  currency pair traded with a  bearish bias shortly after the  start of  the  Asian sessions and  into the  European session driven mostly by  the  soft greenback. The  US Dollar Index headed lower during this period to  hit a  daily low of  97.44 in  the  early American session. The  Release of  the  mixed Canadian consumer price index report for  November by  Statistics Canada helped the  loonie rally. The  headline CPI print met expectations while the  core CPI print missed consensus estimates. The  loonie crashed after the  Bank of  Canada released its rate statement keeping interest rates stable at  1.75% as  expected, followed by  a  dovish monetary policy report.
The release of the upbeat US housing price index for November by the Federal Housing Finance Agency and the positive US existing homes sales report by the National Association of Realtors also boosted the currency pair.
The  currency pair’s short-term performance is likely to  be affected by  BoC Governor Stephen Poloz‘s speech later today.
The  USD/CAD currency pair was trading at  1.3124 as  at  16:03 GMT having rallied from a  low of  1.3036. The  CAD/JPY currency pair was trading at  83.75 having dropped from a  high of  84.35.

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