By Ketki Saxena
Investing.com -- The Canadian dollar retreated from a nine month high against its US counterpart today, driven by recent data that shows Canadian inflation eased to its lowest point in the past two years.
Canada's annual rate of inflation dropped from 4.4% in April down to 3.4%, marginally easing bets on a rate-hike from the Bank of Canada in July. Money markets to predict approximately a 60% likelihood for an interest rate hike at the upcoming policy decision meeting scheduled by the Bank of Canada for July 12th, compared to previous predictions which stood at around 64%, prior to the CPI release. revelations.
"The easing of some core price pressures saw bond yields fall and the Canadian dollar depreciate, as odds of a further 25bp hike in July eased back," says Andrew Grantham, an economist at CIBC (TSX:CM) Capital Markets. "The tamer core readings suggest that policymakers may be able to wait a little longer rather than following up June's hike with another move as early as July."
The Canadian dollar was also pressured by crude prices, largely due to indications that further interest rate hikes are anticipated from global central banks, including the European Central Bank.
Despite today's losses however, analysts at Scotiabank (TSX:BNS) note that "The broader downtrend in USD/CAD persists and remains deeply entrenched across short, medium, and long-term charts. From a technical perspective, there is limited scope or potential for the USD to strengthen and minor gains remain a sell as the downtrend persists."
Scotiabank analysts note that "Resistance is 1.3175/80 and, firmer, at 1.3200/25" while "Support is 1.31 and 1.2980/90."