Canadian Dollar Down as Inflation Slows on Natural Gas

By TraderVox.com

Tradervox.com (Dublin) – According to a report by the Statistics Canada, the Canadian consumer prices advanced less than the market was expecting. This has raised speculation that the Bank of Canada Governor Mark Carney may not be under any pressure to talk about interest rate hike during the next BOC meeting to be held this week. According to the report, consumer price index advanced by 1.2 percent in September, while the core rate dropped to 1.3 percent from 1.6 percent registered in August. The market was expecting the CPI to drop to 1.3 and the core rate to drop to 1.4.

Carney, who had suggested that the BOC decision and statement on Oct 23 will reflect on the slow global economic recovery, has left the key lending rate at 1 percent for over years and he is expected to leave it unchanged in the next meeting. Dawn Desjardins, a Toronto-based economist at Royal Bank of Canada, indicated that the BOC governor has no pressure from the inflation perspective. The report showed that the pace of inflation was affected by a drop of 14.2 percent in the natural gas prices and a 2.2 percent drop in mortgage interest rates. The Statistic Canada report went ahead to point out that the largest contributors to the price gain were gasoline price, which rose by 4.7 percent and the rise in electricity prices by six percent.

According to Krishen Rangasamy, an economist in Montreal at the National Bank Financial said that growth and inflation in Canada seems to be very soft, suggesting that the next BOC meeting will likely lower the economic forecast as it scales back the hawkish language. The Canadian dollar dropped by 0.6 percent against the dollar to trade at 99.07 cent per US dollar at the start of trading in Toronto on Friday, closing the week lower.

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