Canadian Dollar Soft Despite Surge in Crude Oil Prices

The Canadian dollar was soft today, falling or staying flat against its most-traded peers. Even the strong rally of crude oil prices was unable to aid the currency. One of the possible reasons for the loonie’s weakness was disappointing domestic inflation data.
Statistics Canada reported that the Consumer Price Index fell 0.1% in August, without adjustments for seasonal factors, instead of rising at the same rate as analysts had predicted. With seasonal adjustments, the CPI rose 0.1%. Year-on-year, the index was up 0.1% too, matching July’s growth.
Canada’s net foreign securities purchases dropped by C$8.5 billion in July. That was a shock to economists who were expecting a positive figure in the neighborhood of $10.5 billion.
Futures for both American and international grades of crude oil jumped more than 4% on Wednesday. The combination of an unexpected decline of US crude oil inventories and lower supply from the Gulf of Mexico due to a hurricane helped the commodity to log substantial gains. Usually, the Canadian currency moves in lockstep with oil as the commodity is the major source of export revenue of Canada. But today, the loonie and crude were moving in opposite directions.
Tomorrow, Automatic Data Processing will release its employment data for Canada. It is an important report that can help understand how robust the recovery of the Canadian economy from the coronavirus pandemic.
USD/CAD was at about 1.3174 as of 21:14 GMT today after opening at 1.3185. CAD/JPY dropped from 79.95 to 79.60, GBP/CAD rallied from 1.6993 to 1.7087.
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