Canadian Dollar Dips Amid Weak Growth of Consumer Prices

Market Reviews

Canadian dollar fell after weaker-than-expected CPI data. The consumer price index rose 2.2% yoy in April, and by 0.3% from a month earlier. Economists had expected annual inflation to increase by 2.3% and monthly inflation to rise by 0.4%. Core inflation, which excludes gasoline, was up 1.5% from a year earlier and rose by 0.1% from the previous month. Headline retail sales grew by 0.6% mom in March, above forecast of 0.4% mom. Ex-auto sales fell by 0.2% mom versus forecast of 0.5% mom growth.

The euro is trading near the annual lows, while the US dollar index tested new 2018 highs, despite the fact that it lost some momentum later. The single currency is also weighed down by news that the populist parties of 5-Star movement and the League has finally signed the accord to form coalition government. The focus of investor attention today was data on producer prices and wholesale prices in Germany, as well as the trade and payment balance of the Eurozone.

The Eurozone current account surplus narrowed in April, despite a small rise in the trade surplus. The current account surplus narrowed to 32.0 billion, short of the estimate of EUR 35.1 billion. The trade balance surplus rose to EUR 21.1 billion, above the forecast of EUR 20.7 billion. Still, the surplus over the past 12 months increased to 3.6% of the bloc's gross domestic product from 3.5% a year earlier.

German producer price index (PPI) rose to 2.0% in April from 1.9% in March. Meanwhile, it was predicted that this figure will slow down to 1.8%. On a monthly basis, producer prices rose 0.5% from March, when it gained 0.1%. It was expected that prices will rise by 0.3%. Wholesale Prices Index (WPI) in Germany rose by 1.4% yoy in April, which is higher than the growth in March by 1.2%. On a monthly basis, wholesale prices rose by 0.5% from March, when they remained at the same level.

The EU announced the measures to protect interests of EU companies investing in Iran as part of the EU’s continued commitment to the Joint Comprehensive Plan of Action (JCPoA), the Iran nuclear deal. EU launched the formal process to remove obstacles for the European Investment Bank (EIB) to decide under the EU budget guarantee to finance activities outside the European Union, in Iran.