Canadian Dollar Weakens – Can Crude Oil Prices Weigh On Canada CPI?

The massive drop in crude oil price is indeed assumed to translate into a drop in gasoline prices that will weigh on the Canadian economy...


Today at 13:30 (GMT), the Statistics Canada will publish the November Consumer Price Index and economists are expecting a drop in inflation. Here’s why:

Economists are expecting headline inflation to decline by 0.4% on the month, more than October’s 0.3%.

The CPI targeted by the Bank of Canada is expected to reduce to 1.8% from 2.4% in October. Meanwhile, the BOC projected a 2.3% average inflation rate in the fourth quarter.

Looking at the current figures, it is already signaling a likely downward revision in January.

The massive drop in crude oil prices is indeed assumed to translate into a drop in gasoline prices that will weigh on the Canadian economy’s inflation rates. This is because Canada’s energy sector accounts for almost 11% of nominal Gross Domestic Product (GDP) – Government revenues from energy were $10.3 billion in 2016.

In October, gasoline prices declined 3.2% on the month and are very likely to drag the Canadian inflation figures down. Which is why the commodity currency is getting weaker.

For the moment, the USD/CAD is trading bullish at $1.3470 and can face strong support at $1.3420. While the resistance can be seen at $1.3520 today.

Support Resistance
1.3405 1.3511
1.3345 1.3558
1.3238 1.3664
Key Trading Level: 1.3451

ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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