2019.08.2109:50:00UTC+00Canadian Dollar Extends Advance After Solid Inflation Data

The Canadian dollar extended its early rally against its key counterparts in the European session on Wednesday, as a data showed that nation's consumer inflation accelerated more than expected in July, dampening hopes for an interest rate cut by the Bank of Canada.

Data from Statistics Canada showed that the CPI rose 0.4 percent on a seasonally adjusted monthly basis in July, after falling 0.1 percent in the previous month. Economists has expected a 0.2 percent increase.

Core CPI, excluding food and energy, grew 0.2 percent in July from 0.1 percent in June.

On an annual basis, consumer prices rose an unadjusted 2.0 percent in July, same as in June. The rate was forecast to rise 1.7 percent.

Oil prices rose after industry data showed a larger-than-expected drawdown in U.S. crude inventories.

Data from the American Petroleum Institute showed on Tuesday that U.S. crude oil stocks fell by 3.5 million barrels to 439.8 million in the week ended August 16. Analysts had expected a decline of 1.9 million barrels.

Official data from the Energy Information Administration is due later in the day, with analysts expecting a drop of 1.889 million barrels last week.

The currency has been trading stronger in the Asian session as oil prices strengthened after encouraging API data.

The loonie appreciated to 0.9006 versus the aussie, from a low of 0.9038 it recorded at 8:15 am ET. The next possible resistance for the loonie is seen around the 0.89 level.

Data from Westpac showed that Australia's leading index moved above trend since November last year, signaling that the economy is set to grow around trend for the last three or four months of 2019 and well into the first half of next year.

The six month annualized growth rate in the Westpac- Melbourne Institute Leading Index that indicates likely pace of economic activity, rose to +0.05 percent in July from -0.09 percent in June.

The loonie firmed to 1.3250 versus the greenback, setting a weekly high. The pair had ended Tuesday's trading at 1.3317. Next immediate resistance for the loonie is eyed around the 1.30 level.

Having dropped to 1.4792 versus the euro at 5:45 pm ET, the loonie bounced off to hit a 2-day high of 1.4706. The loonie is poised to find resistance around the 1.46 level.

The loonie climbed to a 2-day high of 80.34 against the yen, following a decline to 79.71 at 5:45 pm ET. Should the loonie rises further, 83.5 is likely seen as its next resistance level.

Looking ahead, U.S. existing home sales for July are scheduled for release at 10:00 am ET.

At 2:00 pm ET, the Fed release minutes from the July 30-31 meeting.