TORONTO, March 27 A sharp rally in the Canadian dollar minutes before Wednesday's release of key inflation data sparked market talk that the report had been leaked, an idea Canada's statistics agency played down.
It was not the first time traders have speculated about a leak of Canadian data. Statistics Canada, the federal government agency, investigated similar reports in 2009, but found no evidence that its staff or any media outlets had leaked data. But at the same time it beefed up security measures.
Wednesday's latest speculation centered on February inflation numbers, which came in much higher than expected and caused a brief surge in the Canadian dollar.
"Statistics Canada confirms that this morning's release of the consumer price index occurred as per standard procedures. No issues were detected," the government agency said in response to an email asking whether it was looking into the possibility of a leak.
But traders said the Canadian dollar began strengthening ahead of the 8:30 a.m. (1230 GMT) data release time, and then gained further on the actual number.
"USD/CAD was so bid all morning, trading up in the mid-90s. And then 15 minutes before the data came out, none of the other markets were moving and USD/CAD came off 20 points," said David Bradley, director of foreign exchange trading at Scotiabank.
"It certainly had traded like somebody knew what the number was before it was released," he said, adding that other traders he's spoken with have made similar observations.
RALLY ON INFLATION SURPRISE
Thomson Reuters data shows that the Canadian dollar was at around C$1.0189 and C$1.0196 to the U.S. dollar between 7:25 a.m. (1125 GMT) and 8:10 a.m. on Wednesday morning. It strengthened to C$1.0172 against the U.S. dollar, or 98.31 U.S. cents, by 8:29 a.m. and rallied to C$1.0150 after the data.
"Given that the data showed a strong upside surprise and that the CAD had rallied quite sharply in the 45 minutes before the release, the 'ex post facto' speculation was that the data had been leaked," said Shaun Osborne, chief currency strategist at TD Securities.
Currency traders said this was not the first event to raise suspicions this year, noting similar trends in previous major Canadian data announcements in recent months.
Statscan restricts ahead-of-time distribution of its economic data, but allows accredited media representatives to receive the information under a strict embargo.
The agency tightened its media procedures after May 2009, when traders said they suspected data might have leaked, asking participants in its lockups to switch off all cellphones and hand them in, and closing blinds in its media room window. It also sweeps the room for electronic devices.
The agency confirmed in December 2010 that it had mistakenly leaked data to some "secondary distributors" of its database. It said this happened no more than a minute before the release and that it had taken steps to ensure this would not happen again.