Canadian Dollar Rallies on CPI Data
May 21 2008
Canadian CPI came in above expectations both on the headline and core measures. Year on year inflation accelerated to 1.5% well above the market expectations of 1.3%. However this level still well below the Bank of Canada's target rate of 2.0%. With signs of inflation pressure the market shifted their expectations away from a rate cut at the next meeting.,, However, in reality April's firm CPI reading is unlikely to alter the BoC's forward thinking attitude on monetary policy. Immediately following news of Canadian CPI increasing the Canadian dollar surged nearly 0.4% against the USD.