UsdCad rises 0.35% amid mixed Canadian inflation data

USDCAD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	0.35%	50.7 Pips
Week to-date	-0.64%	-92.7 Pips
January	0.22%	31.8 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

In December, Canada witnessed a mixed bag of inflation data reflecting varied consumer pricing pressures. As per the Bank of Canada’s report, the Core Inflation CPI over a 12-month period saw an uptick from 1.6% in November to 1.8% in December, suggesting some underlying inflationary pressures within the economy. However, contrasting this, Statistics Canada reported that the 1-month headline CPI inflation rate dipped to -0.4% in December from a stagnant 0% in November, indicating a decrease in consumer prices on a monthly basis. Additionally, the BoC CPI Inflation Rate Core for one month decreased further to -0.3% from -0.1% in the previous month, which corroborates a short-term easing in pricing pressure. Meanwhile, the overall 12-month CPI inflation rate slightly decreased, edging down from 1.9% in November to 1.8% in December, as reported by Statistics Canada. This data collectively suggests a complex inflation situation, with longer-term core metrics displaying mild inflation while short-term measures show deflationary trends.

The rise of USDCAD by 0.35% to 1.43816 on Wednesday might have been influenced by these inflationary figures. The simultaneous increase in core inflation and decrease in other short-term metrics could cause uncertainty about Canada’s economic outlook, prompting investors to bet against the Canadian dollar. This uncertainty might lead traders to foresee lesser aggressive monetary tightening or even possible easing by the Bank of Canada, thus lowering the Canadian Dollar’s appeal relative to the United States Dollar. With no major economic events on the calendar, traders may continue to digest this mixed inflation data, influencing volatility in currency exchange rates. The broader strength of the USD or any further shifts in inflation assumptions regarding Canadian policy could continue to exert pressure on the USDCAD exchange rate.

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What can we expect from USDCAD today?

USDCAD on Wednesday rose 0.35% to 1.43816. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for USDCAD looks bullish as the pair ended higher after Wednesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.44157 with break above could target R2 at 1.44499 or figure level area. While towards the downside, we are looking at daily low of 1.42980 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.43910 may suggest continuation after recent positive movement.

For the week to-date, take note that USDCAD is mixed as compared to the prior week.

Key levels to watch out:

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