Canada CPI Overview
Statistics Canada will release the latest consumer inflation figures for April later during the early North American session on Wednesday, at 13:30 GMT. The headline CPI is expected to rise 0.5% during the reported month against the 1.4% increase reported in March. The yearly rate is anticipated to hold steady at 6.7%in April, marking the fastest pace since January 1991. More importantly, the Bank of Canada's Core CPI, which excludes volatile food and energy prices, is estimated to rise 0.4% MoM in April and ease to 5.4% on yearly basis from the 5.5% previous.
How Could it Affect USD/CAD?
Ahead of the key release, the emergence of some US dollar dip-buying assisted the USD/CAD pair to stage a goodish intraday bounce from sub-1.2800 levels, or a two-week low touched earlier this Wednesday. A softer reading should allow spot prices to build on the intraday positive move, through an uptick in crude oil prices could underpin the commodity-linked loonie and cap the upside.
Conversely, a surprisingly stronger Canadian CPI print would lift bets for more rate increases by the Bank of Canada and boost the domestic currency. This, in turn, suggests that the path of least resistance for the USD/CAD pair is to the downside and the attempted recovery move runs the risk of fizzling out rather quickly.
From a technical perspective, any subsequent strength is likely to meet with a fresh supply near the 1.2900 mark. This, in turn, should keep a lid on any further gains near the 1.2930 resistance zone. That said, sustained strength beyond will suggest that the corrective pullback has run its course and shift the bias back in favour of bullish traders. The USD/CAD pair could then climb back to reclaim the 1.3000 psychological mark.
On the flip side, the 1.2800 round figure now seems to protect the immediate downside, below which the USD/CAD pair could slide to the 1.2765 region. Some follow-through selling should pave the way for additional losses and drag spot prices further towards the 1.2700 mark. The latter should act as a pivotal point and help determine the next leg of a directional move for the major.
Key Notes
• USD/CAD to fall back towards the low 1.27 zone on higher than expected Canadian CPI – Scotiabank
• USD/CAD Outlook: Bulls show some resilience below 1.2800 mark ahead of Canadian CPI
• USD/CAD recovers further from two-week low, climbs to mid-1.2800s ahead of Canadian CPI
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 extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.