Forex News – Canadian Dollar slides against USD after data

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Weak Canadian manufacturing data and a higher-than-expected rise in U.S. core consumer inflation caused the Canadian dollar to fall against its U.S. counterpart today.

The U.S saw the largest increase in nearly three years of the core consumer inflation rate in May, driven by a sharp increase both motor vehicle and apparel prices.

Meanwhile across the border, Canadian manufacturers saw sales drop 1.3 percent in April, although as expected, to reverse most of March’s gains as the Japan earthquake cut off supplies to the auto industry.

“Today’s weak print provides a cautious reminder that the pace of economic growth is slowing in Canada,” said Mazen Issa, a macro strategist at TD Securities in a research note.

“We really held in a pretty tight range most of last week,” said Darcy Browne, Managing Director, Capital Markets Trading, CIBC, adding that a lot of the money is currently on the sidelines.

He added that “We’re exposed to the risk-on/risk-off scenarios that’s being presented by either the equity markets or the commodity markets. There’s still a lot of uncertainty.”

Upon release of the data at 12:30GMT, the Canadian Dollar lost 16 pips against the greenback. USDCAD jumped to 0.9707 from 0.9723.

Meanwhile, the Loonie has a chance to be lifted depending on how hawkish Bank of Canada Governor Mark Carney’s speech will be later today. He will be speaking in Vancouver later this afternoon about Canada’s housing market, with investors looking for comments on the impact of low Canadian interest rates on household borrowing.