USD/CAD has been bullish since the middle of last month, even though the USD has been bearish, which indicates that the Canadian Dollar has been even weaker. Buyers have been finding it difficult to push above the resistance zone around 1.37, but on the downside, the 100 SMA (green) has been holding as support on the H4 chart.

We decided to open a long term USD/CAD buy signal above this moving average earlier today, after the dive lower following the Canadian consumer inflation report for November. CPI (consumer price index) ticked up by 0.1% last month against expectations of it remaining flat, pushing the yearly CPI inflation number higher as well.

Canada November CPI Inflation

• November CPI YoY 6.8% vs 6.7% expected
• October CPI YoY was 6.9%
• CPI MoM +0.1% vs 0.0% expected
• October CPI MoM was +0.7%
• Gasoline prices YoY 13.7% vs +17.8% in prior
• Gasoline prices MoM -3.6% vs +9.2% prior
• Food YoY 11.4% vs +11.0% prior
• Mortgage interest costs +14.5% vs +11.4% prior

Core measures:

• BOC core 5.8% vs 5.8% prior
• BOC core m/m 0.0% vs +0.4% prior
• Median 5.0% vs 4.8% prior (revised to +4.9%)
• Trim 5.3% vs 5.3% prior
• Common 6.7% vs 6.2% prior (revised to +6.4%)

The story here is the jump in mortgage interest costs, something that’s been manufactured by the Bank of Canada to fight inflation.

Still, this report makes it more likely the Bank of Canada hikes again in January. Pricing right now is close to 50/50. At the same time, I think what’s left of the Canadian housing market is hanging on by a thread.

USD/CAD Live Chart