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Canadian inflation falls below BOC’s target

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The Canadian dollar pared gains against the greenback after the November inflation came under the Bank of Canada’s (BOC) target and at the slowest pace in 10 months.  The annual reading fell to 1.7% and was primarily reflecting recent declines in gasoline prices, excluding gasoline, the CPI rose 1.9% in November.

Expectations for the BOC to raise rates at the January 9th meeting has completely changed over the past month.  The markets have now completely erased the 25 basis point hike that was fully priced in November.  The next hike has been pushed towards the summer.

Price action on the USD/CAD daily chart show that 1.3500 level remains critical resistance.  If we do see the Fed bring down expectations for future hikes, we could continue to see the loonie extends its gains here.  To the downside, 1.3250 remains initial support, followed by 1.3125.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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