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Canadian dollar eyes CPI

Canada’s CPI report looms

Inflation remains the bane of the economy for many industrialized nations, and Canada has not been immune to this trend. CPI took a step backwards in December, with a reading of -0.1% m/m. However, inflation is expected to have jumped in January, with a consensus of a strong gain of 0.6%. A reading within expectations would indicate that high inflation remains alive and well and will put pressure on the Bank of Canada to take aggressive action in order to curb inflation.

BoC Governor Tiff Macklem has said that more rate hikes are coming in order to lower inflation to the central bank’s 2% target, and there are high expectations that the BoC will match the Federal Reserve in March and raise rates by 25 basis points. Macklem is still singing a tune that inflation is transitory and will ease in the second half of the year. Still, with inflation galloping at a 30-year high and consumers feeling the pinch of higher prices, the BoC may have to raise rates several times before inflation is brought down.

The world remains focused on the crisis at the Ukraine/Russia border, with fears that a Russian invasion could be imminent. Moscow has apparently moved some troops away from the border but President Biden said that this has not been verified and warned that an invasion remains “distinctly possible”. Biden has warned Russia that it would face severe consequences if it invades, and the ball is squarely in Moscow’s court as to what happens next. The US dollar has taken a pause from recent gains, but investors aren’t about to snap up riskier assets until Russia lowers the tensions.

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USD/CAD Technical

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Kenny Fisher

Kenny Fisher [5]

Market Analyst at OANDA [6]
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

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