The loonie, as the Canadian dollar is best known, eased off 4-1/2-year lows against its US counterpart, after data showed Canadian inflation gained traction in December.
Having reached a session high at 1.1138 at 07:30 GMT, USD/CAD erased daily advances to trade at 1.1082 at 14:32 GMT, losing 0.16% on a daily basis. Support was likely to be received at January 22nd low, 1.0954, while resistance was to be encountered at January 23rd high, 1.1174, also the pairs strongest since July 17th 2009.
The loonie drew support after data revealed the Canadian inflation increased its annual pace in December.
According to data by Statistics Canada, the consumer price index (CPI) increased 1.2% in the 12 months to December, the largest advance in 5 months and after a 0.9% increase in November.
The government agency reported that the faster yer-over-year gain in the CPI was mainly driven by higher gasoline prices, which rose 4.7% in the 12 months to December, after a 0.4% increase in November. Data showed that excluding gasoline, consumer prices advanced 1.1% on a year-over-year basis in December, following a 1.0% increase in the previous month.
The CPI consists of eight major components and data by Statistics Canada showed six of them recorded gains in the 12 months through December. CPI advance was led by an increase in the transportation index, followed by higher food prices and shelter costs. The recreation, education and reading index posted no change, while the health and personal care component declined.
However, the monthly CPI posted a 0.2% decrease in December, matching analysts projections and after it remained flat in the preceding month.
Bank of Canadas core consumer price index advanced by 1.3% in the twelve months to December, matching analysts forecasts. The core CPI increased 1.1% in November. However, on a monthly basis the core CPI decreased by 0.4% in December, in line with analysts estimates and after 0.1% drop in the previous month.
BoCs core CPI excludes the eight most volatile components of the CPI (fruit, fruit preparations and nuts; vegetables and vegetable preparations;natural gas cost;mortgage interest cost;fuel oil and other fuels;gasoline;inter-city transportation;tobacco products and smokers supplies).
Meanwhile, demand for the US dollar continued to be underpinned by a recent string of overall optimistic reports, which boosted the view of further cuts in Federal Reserve’s monetary stimulus.
The Bureau of Labor Statistics reported on Thursday that the number of initial jobless claims in the United States rose by 1 000 to 326 000 in the week ended January 18th, from a revised down number of 325 000 during the previous week. Analysts had expected that the people who filed for unemployment assistance will increase to 330 000.
A separate report said that existing home sales in the country increased 1.0% to the annualized 4.87 million units in December, following a three-month streak of declines. According to data by the National Association of Realtors (NAR), existing home sales reached a seven-year high in December 2013 compared to December 2012. During the whole 2013 sales increased to 5.09 million units, or a 9.1% gain in comparison to the whole 2012. Experts had anticipated that existing home sales will reach the annualized 4.93 million units in December. November’s result has been revised down to 4.82 million from 4.90 million previously.
The average home price in the country was 198 000 USD in December 2013, or a 9.9% increase in comparison with the same month a year ago, which came as a result of weaker supply.
Elsewhere, having reached a session high at 1.3738 at 11:38 GMT, EUR/USD traded at 1.3717 at 12:03 GMT, adding 0.15% for the day. Support was likely to be found at January 23rd low, 1.3529, while resistance was to be met at January 2nd high, 1.3775. Yesterday the pair rose by 1.06%, the largest daily advance since October 17th.
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