Canadian CPI Overview
Wednesday's Canadian economic docket features the key release of consumer inflation figures for June, scheduled to be published at 12:30 GMT. The headline CPI is anticipated to have fallen by 0.2% month-on-month (m-o-m), with the yearly falling to 2.0% from 2.4% previous. Meanwhile, the BoC's core CPI is expected to have edged higher by 0.1% m-o-m and rise to 2.6% yearly rate during the reported month.
As Petr Krpata, chief EMEA FX and IR strategist at ING writes - “According to a Bloomberg survey, headline CPI should decelerate, although all core measures (preferred by the Bank of Canada) should stay above the 2% target range mid-point. This should allow the BoC to stick to a neutral stance, keeping any USD/CAD rebound broadly limited. Today, we expect the pair to stay range-bound and consolidate below 1.3050.”
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 key release, the USD/CAD pair was seen trading with modest losses just above mid-1.3000s and surprisingly stronger reading might trigger the resumption of the pair’s well-established bearish trend. The downfall could drag the pair back towards challenging the key 1.30 psychological mark, below which the downfall could further get extended towards 1.2970-65 intermediate support en-route the 1.2930 region.
Alternatively, softer readings might prompt some short-covering move, which should assist the pair to surpass the 1.3100 handle and aim towards weekly swing highs resistance near the 1.3145-50 region. A follow-through buying would suggest that the pair might have bottomed out in the near-term and pave the way for a further recovery towards the 1.3200 handle en-route the 200-day EMA – around mid-1.3200s.
Key Notes
• Canada: Headline inflation to decelerate to 2.1% y/y in June - TDS
• Canadian CPI: Focus be to what extent May’s surge is reversed - Wells Fargo
• USD/CAD slides back closer to mid-1.3000s, focus shifts to Canadian CPI
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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD consolidates gains below 1.0700 amid upbeat mood
EUR/USD is consolidating its recovery below 1.0700 in the European session on Thursday. The US Dollar holds its corrective decline amid improving market mood, despite looming Middle East geopolitical risks. Speeches from ECB and Fed officials remain on tap.
GBP/USD clings to moderate gains above 1.2450 on US Dollar weakness
GBP/USD is clinging to recovery gains above 1.2450 in European trading on Thursday. The pair stays supported by a sustained US Dollar weakness alongside the US Treasury bond yields. Risk appetite also underpins the higher-yielding currency pair. ahead of mid-tier US data and Fedspeak.
Gold appears a ‘buy-the-dips’ trade on simmering Israel-Iran tensions
Gold price attempts another run to reclaim $2,400 amid looming geopolitical risks. US Dollar pulls back with Treasury yields despite hawkish Fedspeak, as risk appetite returns.
Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court
Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row.
Have we seen the extent of the Fed rate repricing?
Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.