USD/CAD Tumbling Lower on Higher Oil and Inflation in Canada
USD/CAD seems to have turned bearish as Oil prices keep surging, and yesterday's jump in CPI inflation has given further support
The US dollar (USD) has been strengthening on the FED keeping the hopes up for additional rate rises, keeping USD/CAD on a positive trend since July, continuously pushing the price to higher highs. The deteriorating Canadian economy, which has kept the Bank of Canada on the sidelines, has been a big contributor to the upward trend in USD/CAD. Although the market has been driving this pair higher because it does not believe the BOC will hike rates again, there is still a ton of data to come before the next meeting.
Today we had the inflation report which showed a bounce in August. Headline CPI inflation jumped 7 points higher to 4.0% last month from 3.3% in July, which might be a reason for the BOC to keep the rhetoric strong, although the odds for further rate hikes are low. USD/CAD has dived to 1.3380 after the report, although the surge in crude Oil, with US WTI above $92 is also helping the CAD.
Canada August CPI Inflation Report
Canada CPI for the month of August 2023
- Canada August CPI 4.0% versus 3.8% expected
- July CPI infation was 3.3%
- CPI MoM 0.4% % versus 0.3% expected
- Prior CPI MoM 0.6%
- CPI YoY 4.0% % versus 3.8% expected
Core measures:
- BOC Core YoY 3.3% versus 3.2% last month
- BOC Core MoM 0.1% versus 0.5% last month
- CPI median 4.1% versus 3.9% last month (revised from 3.7%
- CPI Trim 3.9% versus 3.6% last month
- CPI Common 4.8% versus 4.8% last month
Highlights:
- The rise in August’s CPI was majorly due to higher gasoline prices (+0.8%) compared to a decrease in July (-12.9%).
- Excluding gasoline, the CPI growth was consistent at 4.1% for both August and July.
- Canadians experienced higher rent, mortgage interest, and energy costs in August.
- Prices for travel-related services decreased, and food price growth slowed compared to the previous month.
- The monthly deceleration was largely due to drops in travel tours (-6.4%) and air transportation (-6.9%) prices after the July summer travel peak.
- On a seasonally adjusted basis, the monthly CPI growth was 0.6%.
USD/CAD Live Chart
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