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Canadian Dollar Plunges as Weak Retail Sales Outweigh Higher CPI

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Canadian Dollar Plunges as Weak Retail Sales Outweigh Higher CPI

The Canadian dollar fell below 90 cents US Friday, as plummeting retail sales in December outweighed higher consumer inflation last month.

The USDCAD pair rose to a session high of 1.1197 in Europe, as the forex market continued to bid up the greenback after solid PMI and CPI data Thursday. As of 15:30 GMT, the pair was trading at 1.1135, a gain of 35 pips. The North American pair has risen for three consecutive days, gaining more than 2 percent during that period. The technical picture is moderately bearish, as the pair tests the 1.1135 resistance. A break above this level exposes 1.1163 and 1.1191 as the next targets. Technical support is ascending at 1.1023, 1.1050 and 1.1078.

Canadian retail sales in December declined at the sharpest rate in 12 months, official data from Statistics Canada showed today. Severe weather and record snowfall saw retail revenues decline 1.8 percent, after rising 0.5 percent the previous month. Economists in a Reuters survey forecast a decline of 0.4 percent.

Stronger-than-forecast consumer inflation was unable to shore up the loonie. The consumer price index rose 1.5 percent annually in January, exceeding estimates. Persistently low inflation was a key concern for Canadian policymakers in 2013. Like other advanced industrialized nations, Canada saw inflation trend well below the central bank’s 2 percent target last year.

In the United States, weaker than forecast existing home sales could limit the greenback’s gains heading into the weekend. Existing home sales declined 5.1 percent to 4.62 million in January, according to the National Association of Realtors.

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