When is Canadian CPI report and how could it affect USD/CAD?


Canadian CPI Overview

Wednesday's Canadian economic docket features the key release of consumer inflation figures for the month of April, scheduled to be published at 12:30 GMT. The headline CPI is anticipated to have risen by 0.4% a monthly basis, lifting the yearly to 2.0% from 1.9% previous and reaching target for the first month since December. Meanwhile, the BoC's core CPI is expected to remain flat on a monthly basis but tick higher to 1.8% yearly rate during the reported month

Deviation impact on USD/CAD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction on the pair is likely to be around 43-pips during the first 15-minutes and could get extended to 66-pips in the following 4-hours in case of a relative deviation of -0.86. Alternatively, the reaction to a higher than expected reading, with a relative deviation of +0.68 or higher could be around 61-pips in the first 15-minutes and 75-pips in the following 4-hours. 

How could it affect USD/CAD?

Ahead of the important release, the pair was seen consolidating in a range above mid-1.3400s and even a slight disappointment could accelerate the up-move beyond the key 1.3500 psychological mark. A follow-through buying has the potential to lift the pair further beyond April swing highs, around the 1.3520 region, towards its next major resistance near the 1.3565-70 supply zone.

Alternatively, hotter than expected inflation readings should provide a goodish lift to the Canadian Dollar and drag the pair back towards the 1.3410-1.3400 region. A subsequent decline below the 1.3380 horizontal support might prompt some aggressive technical selling and turn the pair vulnerable to accelerate the slide towards testing sub-1.3300 level.

Key Notes

   •  Canada: Headline CPI likely to firm to 2.0% in April - TDS

   •  USD/CAD Forecast: Price tinkering with the downside,1.3380 guards run to 38.2% Fibo /1.33 the figure

   •  USD/CAD consolidates in a range, above mid-1.3400s ahead of US/Canadian macro data

About BoC's Core CPI

Consumer Price Index Core is released by the Bank of Canada. “Core” CPI excludes fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products. These volatile core 8 are considered as the key indicator for inflation in Canada. Generally speaking, a high reading anticipates a hawkish attitude by the BoC, and that is said to be positive (or bullish) for the CAD.

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