USD/CAD rose after Canadian CPI data

US dollar recorded gains against its Canadian counterpart on Friday, following the release of consumer price inflation report out of Canada to show that the CPI has slowed down in August.

USD/CAD reached a session high at 1.0301 at 12:19 GMT, also the pairs highest point since September 18th, after which consolidation followed at 1.0289, still gaining 0.20% for the day. Support was likely to be received at September 18th low, 1.0202, while resistance was to be met at September 17th high, 1.0335.

Earlier today it was reported that Canadian index of consumer prices (CPI) slowed down its annual rate of increase in August, making additional distance from the targeted rate of inflation of 2%, sought by the Royal Bank of Canada. Consumers have paid less for gasoline, rents and automobiles, as this could suggest that the central bank was not still in need of a tightened monetary policy. The CPI remained unchanged in August on a monthly basis, following the 0.1% uptick in July. The annual CPI climbed 1.1% in August, after it advanced 1.3% in the preceding month. The core consumer price index, which excludes prices of 8 volatile components, including food and energy, rose by 0.2% in August on a monthly basis in line with expectations, after it remained flat in July. On annual basis, the core CPI also demonstrated a slow down, to 1.3% in August from 1.4% in July. Annual core CPI met preliminary estimates.

Meanwhile, market players remained wary, as US Republicans and Democrats were to reach a decision on how to continue funding the government and whether to raise the debt ceiling. In case Barack Obama’s administration and Republicans do not reach an agreement to raise the borrowing cap before October, the United States Treasury might be able to avoid surpassing the debt limit of 16.7 trillion USD, which could trigger the country’s default.

Elsewhere, the Canadian currency was lower against the euro, with EUR/CAD cross advancing 0.19% to trade at 1.3917 at 14:20 GMT. It became clear that the index of economic sentiment in the Euro zone continued to improve, as it climbed to -14.9 in September from -15.6 in August, reaching its highest level since July 2011. This indicator has been demonstrating improving results since December 2012, supported by the positive economic development in the euro bloc. Increasing confidence among consumers in the region was a major factor behind the slight increase in consumer spending during the second quarter of the year, facilitating economys return to growth after 18 months of recession. In addition, GBP/CAD pair was gaining 0.10% for the day to trade at 1.6478 at 14:31 GMT.