The resistance at 1.37 held again for USD/CAD

USD/CAD Tumbling Lower on Higher Oil and Inflation in Canada

Posted Wednesday, September 20, 2023 by
Skerdian Meta • 2 min read

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

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


  • 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%.


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