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

Canadian CPI Overview

Wednesday's economic docket highlights the release of the Canadian consumer inflation figures for January, scheduled later during the early North American session at 13:30 GMT. The headline CPI is expected to rise by 0.4% during the reported month as against 0.2% fall recorded in December. The yearly CPI is anticipated to have edged higher to 0.8% from the previous month's reading of 0.7%. Meanwhile, the BoC's core CPI is anticipated to remain flat MoM and ease to 1.4% from 1.5% on yearly basis.

How could it affect USD/CAD?

Ahead of the key macro data, some strong follow-through US dollar buying assisted the USD/CAD pair to build on the previous day's solid bounce from the vicinity of the 1.2600 mark. However, the ongoing bullish run in crude oil prices underpinned the commodity-linked loonie and capped gains for the pair, rather prompted some selling at higher levels.

Meanwhile, the market reaction to the data is more likely to remain limited as the focus will be on the release of the latest FOMC meeting minutes. Nevertheless, any significant divergence from the expected numbers might still produce some meaningful trading opportunities.

According to Nenad Kerkez, Head of Technical Analysis and Trading at Elite CurrenSea: "1.2705-30 is the POC zone. We could see a drop off the zone towards the both weekly and daily camarilla pivot points. The final target might be the D L5  - 1.2589. However, we need to pay attention to any upside move it might happen. If the price stays capped below the POC and 88.6 the downmove is inevitable."

Key Notes

  •  USD/CAD analysis: Two scenarios likely

  •  USD/CAD Price Analysis: 200-HMA, two-week-old hurdle probe bulls below 1.2700

  •  Rocky Canadian recovery

About Canadian CPI

The Consumer Price Index (CPI) released by Statistics Canada is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of CAD is dragged down by inflation. The Bank of Canada aims at an inflation range (1%-3%). Generally speaking, a high reading is seen as anticipatory of a rate hike and is positive (or bullish) for the CAD.

About BoC 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.