USD/CAD has been affected by quite a few factors recently. This pair is affected by the FED, which has turned hawkish since last summer as inflation keeps surging in the US, sending the USD higher, thus having a positive impact on this pair. But, the bullish momentum in this pair ended at the end of 2021 as crude Oil kept climbing higher.

Oil kept increasing as US WTI approached the $100 level in February and this month crude oil received a strong boost, surging to $130 almost. That has helped the CAD, which has held well against the USD during this month, while other major currencies have been declining.

US WTI Crude Oil Daily Chart

Crude oil has fallen below $100 again and is facing the 50 daily SMA now

Inflation, on the other hand, has been increasing in Canada as well and today’s CPI (consumer price index) report confirmed just that, although it still remains well below US CPI. As a result, the Bank of Canada is not thinking about increasing interest rates right now, as the FED is expected to do this evening, which is expected to hike rates by 25 bps to 0.50% but might hike them by 50 bps as well, to 0.75%.

Canada February 2022 Consumer Price Index Report

CPI and core CPI year on year

• February CPI 5.7% YoY versus 5.5% expected
• CPI year on year +5.7% recorded its largest gain since August 1991 (+6.0%). February marked the second consecutive month where headline inflation exceeded 5%
• January CPI YoY was 5.1%
• CPI month-to-month 1.0% versus 0.9% expected. This was the highest reading since February 2013.
• February MoM rose 0.9%.
• The SA MOM CPI comes in at 0.6% vs 0.6% last month
• January CPI MoM was 0.9%
• Core CPI MoM SA 0.3% versus 0.4% last month
• CPI excluding gasoline prices rose 4.7% versus 4.3% in January

Core measures year on year

• Common 2.6% versus 2.4% estimate and 2.4% last month (revised from 2.3%
• Median 3.5% versus 3.4% last month (revised from 3.3%)
• Trimmed 4.3% vs 4.0% last month (unchanged from prior month estimate)

Highlights :

• Canadian consumers paid 32.3% more at the pump versus February 2021. Monthly gas prices increased 6.9% as result of the conflict in the Europe and uncertainty surrounding global oil supply
• food prices rose 7.4% year on year versus 6.5% last month. This is the largest increase since May 2019.
• Shelter costs rose 6.6% year on year at the fastest pace since August 1983. Owned accommodations rose to 6.2% and rented accommodations rose 4.2%
• household appliances increase 7.8% with cooking appliances up 9.4% year on year. Refrigerators and freezers rose 15.6%, while laundry and dishwashing appliances rose 9.1%
• good news is telephone services moved lower with prices falling by -7.9% year on year.

The USD/CAD has moved to a new session low (the price has been moving lower today) and approached the 100 day moving average 1.2679. The low price reached 1.2686.

USD/CAD Live Chart