Strong Canada CPI, Retail Sales to Drag on USD/CAD Rate

– Canada Consumer Price Index (CPI) to Climb Annualized 2.0%.

Retail Sales to Increase Another 0.3% in October.

Trading a News: Canada Consumer Price Index (CPI)

Canada CPI

The near-term miscarry in USD/CAD might continue to uncover over a subsequent 24-hours of trade as Canada’s Consumer Price Index (CPI) is approaching to collect adult to annualized 2.0% in November, while Retail Sales are projected to boost another 0.3% in October.

Faster cost enlargement interconnected with signs of stronger expenditure might inspire a Bank of Canada (BoC) to adopt a some-more hawkish tinge in 2018 as ‘inflation has been somewhat aloft than expected and will continue to be increasing in a brief tenure by proxy factors.’ As a result, Governor Stephen Poloz and Co. might stress ‘higher seductiveness rates will expected be compulsory over time’ during a subsequent assembly on Jan 17, with a Canadian dollar during risk of exhibiting a some-more bullish function as a BoC appears to be on lane to serve normalize financial process over a entrance months.

However, a array of below-forecast prints might eventually fuel a new allege in a dollar-loonie sell rate as it dampens bets for an approaching BoC rate-hike.

Impact that Canada CPI has had on USD/CAD during a previous release

October 2017 Canada Consumer Price Index (CPI)

USD/CAD 5-Minute Chart


Canada’s Consumer Price Index (CPI) narrowed to an annualized 1.4% from 1.6% in September, while a core rate of acceleration modernized to 1.6% from 1.5% during a same period. A deeper demeanour during a news showed a slack was led by a 3.2% decrease in gasoline prices, with a cost for appetite also slipping 1.8%, while prices for clothing/footwear increasing another 1.5% in October.

The Canadian dollar struggled to reason a belligerent following a CPI report, with USD/CAD climbing above a 1.2800 handle, though a greeting was ephemeral as a span finished a day during 1.2769. Looking to trade Canada’s CPI news though don’t have a strategy? Download examination a DailyFX Advanced Guide for Trading a News to learn a 8 step strategy.

USD/CAD Daily Chart

USD/CAD Daily Chart

  • Break of a monthly opening operation keeps a topside targets on a radar for USD/CAD, though a near-term opinion stays dark with churned signals as a Relative Strength Index (RSI) continues to lane a bearish arrangement carried over from November.
  • The fibre of unsuccessful attempts to exam a 1.2980 (61.8% retracement) to 1.3030 (50% expansion) segment suggests a allege from a September-low (1.2061) is losing momentum, with a pierce next a 1.2720 (38.2% retracement) to 1.2770 (38.2% expansion) area lifting a risk for a run during a monthly-low (1.2624).
  • Need a break/close next 1.2620 (50% retracement) to open adult a downside targets, with a initial jump entrance in around 1.2440 (23.6% expansion) to 1.2510 (78.6% retracement) followed by 1.2350 (38.2% expansion).

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— Written by David Song, Currency Analyst

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