Canada’s Dollar Drops On Lower Consumer Prices

The Canadian dollar fell today after the consumer prices unexpectedly decreased, spurring the speculations that the central bank would stop the interest rates increases when its policy makers will meet next month.

The consumer prices index fell 0.1 percent in August, compared with the growth by 0.5 percent in July. The analysts expected the index to remain the same. The core consumer prices index, which excludes the effect of changes in indirect taxes and eight of the most volatile components, increased 0.1 percent in line with the forecasts. The core inflation rose in August from a year ago by 1.6 percent, matching the expectations.

The investors bet that the chances of the rates hike in October are around 40 percent. The Bank of Canada already raised the interest rates three times since June from 0.25 percent to 1 percent.

USD/CAD rose from 1.0280 to 1.03709 as of 15:58 GMT today, following the advance to 1.0329. EUR/CAD went up from 1.3423 to 1.3541.

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