The Canadian Dollar's meteoric rise across the global foreign exchange market continues, having received a boost from Canada's most recent set of inflation data which points to further interest rate rises at the Bank of Canada in coming months.

Statistics Canada reports the headline Consumer Price Index (CPI) rose 1.2% on a year-on-year basis in July, up from a 1.0% gain in June; this came in line with economist expectations.

Desite the data coming in on target the Canadian Dollar gave a decisive reaction and pushed the Pound to Canadian Dollar exchange rate down nearly 0.8% to 1.6183.

The US to Canadian Dollar rate fell three quarters of a percent to 1.2582.

The Canadian Dollar is in fact the week's best-performing G10 currency thanks to the late push.

The CAD has been a star performer on global FX markets since May after the ship that is the Bank of Canada turned and plotted a course towards higher interest rates.

It is a combination of higher oil prices and expectations for higher interest rates in the future that will keep the Canadian Dollar on its journey to greater value.

"The underlying trend for core inflation is now consistent with an economy characterized by diminishing excess capacity. Today’s report supports our view that the central bank will hike in October," says Matthieu Arseneau at NBF Economics and Strategy.

Looking ahead, the Canadian Dollar is likely to extend its gains, particularly against a limp British Pound.

"GBP/CAD is threatening the 1.62 level and breaking the mid-February lows with a push to levels last seen in mid-January," says Shaun Osborne at Bank of Nova Scotia in Toronto.

His studies confirm daily momentum signals to be bearish while DMI’s are providing confirmation, and ADX trend strength is firming.

"We highlight the absence of any major support between current levels and the January multi-year low around 1.5720. GBP/CAD is vulnerable and we remain bearish," says Osborne.

Canadian Dollar Performance in 2017: From Zero to Hero

1) The recovery of the Canadian dollar started as a positive spill-over from higher oil prices at the start of May.

2) The Canadian dollar was already oversold and the recovery in oil prices was used to take profit on speculative Canadian dollar shorts.

3) In June, an official of the Bank of Canada hinted that official interest rates could be hiked sparing a notable recovery. This was the start shot of an impressive rally in the Canadian dollar.

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