Canadian Dollar Rises on Yen Selling Before Inflation Report
The Canadian dollar rose for the second day against its U.S. counterpart as Japan indicated its policy of printing yen to stimulate the economy were unopposed by the G-20, sending investors into higher yielding currencies.
The currency fell against the majority of its 16 most traded peers ahead of data expected to show the consumer price index fell to 0.3 percent in March from 1.2 percent the month before, bringing the annual reading to 1.1 percent, close to the bottom of the central bank’s target band between 1 percent and 3 percent, according to a Bloomberg survey of 21 economists. Japanese Finance Minister Taro Aso said Japan’s asset purchases that have caused the currency to weaken were unopposed at a Group-of-20 meeting in Washington.
“We see a weaker yen and therefore there’s a move into riskier assets, that could be why equity markets are higher, because the market sees no opposition to Bank of Japan policy and they see further quantitative easing which is going to buoy equity markets and buoy the Canadian dollar along with it,” said Eimear Daly, a currency market analyst at Monex Europe Ltd., said by phone from London. “I think it’s going to weaken off if the CPI number comes out less than expected, because people are starting to think weaker CPI it increases the possibility the Bank of Canada would have to ease, and so a weaker Canadian dollar.”
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