USD/CAD with a sharp advance on Canadian inflation and retail sales data

US dollar skyrocketed against its Canadian counterpart on Friday after the release of not so confident economic data from Canada.

USD/CAD pair jumped to a session high at 1.0486 at 12:50 GMT, advancing almost 90 pips, compared to the trading levels right before Canadian news. This was pairs highest value since November 2011. Subsequently, the cross consolidated at 1.0477, up 0.86% for the day. Support was expected in the range 1.0350-1.0365, while resistance was to be met at current session high.

Minutes ago, it was reported that Consumer Price Index (CPI) in Canada rose at a slower pace than projected in May, as natural gas prices jumped the most for the past four and a half years. Gasoline prices were significantly lower. Given these results, Canadian central bank was not likely to raise interest rates. Consumer prices rose by 0.2% in May on a monthly basis, compared to the registered 0.2% drop in April. On annual basis, consumer inflation rose to 0.7% in May, as the index registered a 3.5-year low in April, reaching 0.4%. Experts had projected a rise of annual inflation to 0.9%.

Core Consumer Price Index (CPI), which excludes volatile elements like food and energy costs, also rose by 0.2% in May on a monthly basis from 0.1% in April. In annual terms, core consumer inflation rose by 1.1% in May in line with projections.

In addition, another report stated that Canadian retail sales increased at a slower rate than expected in April, as higher prices of automobiles and electronics were neutralized by the drop in prices of gasoline and weaker sales of clothing. Total retail sales rose by 0.1% in April to 39.52 billion CAD, while in March the indicator remained without change. Retail Sales ex Autos unexpectedly dipped by 0.3% in April to 30.46 billion CAD, keeping the same rate of decrease as that recorded one month ago. March result pointed a 0.2% drop previously. Preliminary estimates showed a 0.2% increase in total sales and no change in retail sales ex automobiles.

Meanwhile, the greenback remained resilient against most of its peers on Friday, as a result of prospects of FED decelerating its Quantitative Easing by the end of 2013 and completely terminating the program in the middle of the next year.