Canadian dollar rises on strong CPI

The Canadian dollar has recorded slight gains on Wednesday, recovering the losses seen on Tuesday. Currently, the pair is trading at 1.3050, down 0.42% on the day.

Canada consumer inflation rises

There was positive news on the inflation front, as October inflation in Canada rose to 0.4%, after two consecutive declines of -0.1%. This marked the first gain by CPI in four months and also beat the estimate of 0.2%. Trimmed CPI, an indicator which the Bank of Canada likes to use to measure core inflation, showed a second straight gain of 1.8%. Inflation is a key measure of economic activity, and the October numbers are a positive sign with regard to growth in Q4.

Retail sales next

South of the border, US retail sales were soft on Monday, dragging financial markets lower. The headline figure slowed to 0.3%, down from 1.9%, while core retail sales fell from 1.5% to 0.2%. Both releases missed their forecasts. Canada releases retail sales for September on Friday, and the markets are projecting a downward trend compared to August. The forecast stands at 0.2% for the headline release and 0.0% for Core Retail Sales. The releases could affect the movement of USD/CAD. The Covid-19 pandemic has caused tremendous economic damage to Canada and the US, and there are serious concerns that a resurgence of Covid in both countries could have a severe impact on the normally robust Christmas shopping season. With millions out of work and the economy in a fragile state, consumers will be careful about making extravagant purchases. Covid has forced many businesses to remain shut and many people are avoiding leaving their homes, which has also hurt consumer spending.

.

USD/CAD Technical

  • There is support at 1.2985. Below, there is support at the 1.2835
  • There is resistance at 1.3123, followed by resistance at 1.3229
  • USD/CAD continues to test the 10-day MA line

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)