News and Updates

The Canadian dollar has gained another half cent against the US dollar overnight and has now risen by 1.5 cents since yesterday’s low. This surge in the Canadian dollar’s value occurred after the release of higher-than-expected Canadian inflation numbers this morning. In April, inflation rose by 0.7%, surpassing the 0.4% anticipated by analysts. Additionally, on an annualized basis, Canadian inflation increased by 4.4% compared to the expected 4.1%. This has created a more uncertain path forward for the Bank of Canada.

Markets were generally lower on Thursday as investors grappled with understanding the implications of yesterday’s inflation numbers, which came in slightly lower than expected at 4.9% instead of 5%. The ongoing crisis in the US regional banking sector also weighed heavily on the markets, with another US regional bank facing pressure. PacWest’s shares plunged over 20% today after reporting larger than expected deposit outflows. These factors caused nervousness among investors, leading them to seek safe haven currencies like the US dollar. Consequently, the US dollar traded higher against most currencies, including the Canadian dollar. The Canadian dollar dropped by ¾ of a penny this morning and has now lost over a full penny since Monday’s near one-month high.

This morning’s Consumer Price Index Report showed that US inflation cooled to 4.9% in April, slightly lower than the expected 5%. The good news is that this marks the 10th consecutive decline, but the bad news is that inflation remains stubbornly high and significantly far from the Federal Reserve’s target rate of 2%.

Disappointing Chinese import volumes, which are seen as a barometer for global economic strength, and US Treasury Secretary Yellen’s comments about the potential catastrophic global economic impact of not resolving the US government’s debt ceiling, drove markets lower yesterday and this morning.