Canada CPI Overview
Statistics Canada will release the latest consumer inflation figures for May later during the early North American session on Wednesday, at 12:30 GMT. The headline CPI is expected to rise 1.0% during the reported month against the 0.6% increase reported in April. The yearly rate is also anticipated to accelerate to its highest in nearly 40 years, to 7.4% in May from 6.8% previous. More importantly, the Bank of Canada's Core CPI, which excludes volatile food and energy prices, is estimated to rise 0.3% MoM in May and to 5.9% on yearly basis from the 5.7% in April.
How Could it Affect USD/CAD?
A stronger inflation report would fuel speculations that the Bank of Canada will match the Fed's recent 75bps rate hike move when it next meets on July 13. This would be the biggest hike in 24 years and lend some support to the domestic currency. That said, a slump in crude oil prices could act as a headwind for the commodity-linked loonie.
Conversely, a softer print - though seems unlikely - would be enough to trigger some short-covering around the USD/CAD pair. That said, any immediate reaction is likely to remain limited ahead of the key event risk - Fed Chair Jerome Powell's semi-annual testimony before the Senate Banking Committee. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the pair is to the upside.
Key Notes
• USD/CAD Analysis: Bulls looking to seize back control, Canadian CPI/Powell’s testimony eyed
• USD/CAD: Break above 1.31 to open up additional gains towards 1.3334 – Credit Suisse
• USD/CAD Price Analysis: Advances towards 1.3000 on symmetrical triangle breakout
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.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.