USDCAD Analysis
| Performance after Tuesday | |||||
| Period | Pct | Chg | Momentum | ||
| Tuesday | -0.81% | -117.6 Pips |  |
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| Week to-date | -1.08% | -156.5 Pips | |
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| January | -0.22% | -32 Pips | |
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Upcoming key events (London Time)
No major events for the day.
What happened lately
Canada’s economic data reveal a mixed inflation picture for December. The Bank of Canada’s Core Inflation CPI (12-month) noted an increase to 1.8% from November’s 1.6%, indicating a modest rise in the underlying inflationary pressures over the year. In contrast, the month-on-month data shows a dip in consumer prices. The overall CPI Inflation Rate fell to -0.4% in December, down from November’s 0%, reflecting a deflationary tendency during the month. Core inflation, which excludes volatile items, decreased to -0.3% for the month, dropping further from the previous -0.1%. This suggests that, despite the annual core CPI increase, short-term dynamics point towards declining price levels, which could be attributed to seasonal factors or slowing demand pressures.
The impact on the USDCAD exchange rate can be multi-faceted. The drop in the inflation rate and negative monthly core inflation could hint at a potential easing of monetary policy by the Bank of Canada if deflationary trends continue or deepen, potentially leading to a weaker Canadian dollar. However, as the annual core inflation rate has risen, it may not be immediate cause for concern or action by the central bank. On the day referenced, USDCAD experienced a drop of 0.81%, reaching a level of 1.43178. This could reflect market sentiments weighing in on this mixed economic data or other external factors impacting the currency pair. Without major economic events on the horizon, the pair might remain exposed to consolidation in the near term as traders digest these inflation figures and their potential implications on monetary policy and economic health.
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What can we expect from USDCAD today?
USDCAD on Tuesday dropped -0.81% to 1.43178. Price is below 9-Day EMA while Stochastic is falling.
Updated daily direction for USDCAD looks mixed as the pair is likely to consolidate above 1.42306 (S1).
Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.45157 or trades above daily pivot 1.43732. Break above could target R1 at 1.44603. While to the downside, we are looking at 1.42306 (S1) and daily low of 1.42860 as support levels. USDCAD need to break on either side to indicate a short-term bias. A close below 1.42860 would indicate selling pressure.
For the week to-date, take note that USDCAD is mixed as compared to the prior week.
Key levels to watch out:
| R3 | 1.469 |
| R2 | 1.46029 |
| R1 | 1.44603 |
| Daily Pivot | 1.43732 |
| S1 | 1.42306 |
| S2 | 1.41435 |
| S3 | 1.40009 |
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