Rising Canadian CPI could trigger faster pullback for USD/CAD
The North American pair was trading lower Thursday after Canadian consumer inflation rose faster than forecast last month. The unexpected spike in consumer prices could trigger a larger pullback for the USD/CAD, which has gained a quarter of a percent over a three-day winning streak.
Consumer inflation in Canada rose 1.5 percent annually in March, following a 1.1 percent increase the previous month, Statistics Canada reported today in Ottawa. A median estimate of economists called for an annual gain of 1.4 percent. Month-on-month, consumer prices were up 0.6 percent.
The so-called core measure, which excludes volatile goods such as food, energy, alcohol and tobacco, rose 1.3 percent annually, the Bank of Canada also reported today.
In the early North American session the USDCAD pair was trading at 1.0996, a loss of nearly 0.2 percent. According to the 4-hour chart, initial support is likely found at 1.0985, followed by 1.0957. On the upside, technical resistance is likely to be found at 1.1061, followed by 1.1089.
The Canadian dollar suffered a fresh setback Wednesday as the forex market dissected the latest rate statement from the BOC. Opting to hold the overnight rate at 1 percent, the central bank left the door open to a possible rate cut in the future. Although chances of a rate cut are slim, the central bank said the timing and direction of future policy would depend on new information.
According to the BOC press release, “The timing and direction of the next change to the policy rate will depend on how new information influences the balance of risks.”
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