USD/CAD Tests the 50 Daily SMA Despite Higher Inflation in Canada

The negative sentiment in financial markets has been weighing on risk assets this week such as the AUD, NZD and the CAD, putting USD/CAD above the 200-day SMA. The USD is taking advantage of this and continues to push higher across the board, helped by FED’s Waller today as well. The CPI numbers from Canada were higher than expectations, but that didn’t help the CAD much.

USD/CAD turned bullish in the last few days of last year, after the USD had been declining for two months and has been gaining more than 3 cents in total. Moving averages continue to hold as support on smaller timeframe charts, with the price peaking above 1.35 today, after the hawkish comments made by Christopher Waller, who was the first to signal rate cuts in November.

The CPI (Consumer Price Index) report from Canada was released earlier and the annualized number came above expectations. This comes ahead of this month’s meeting by the Bank of Canada. Prior to the release, the market had priced in a 23% possibility of a cut in January but now the odds stand at 19%, while the odds for a March cat have declined to 30% from 46% previously. However, USD/CAD continues to remain bullish, but buyers yesterday couldn’t break above the 50 SMA (yellow) on the daily chart above.

Canadian December Consumer Price Index Inflation Report

• December CPI year-over-year (YoY) is reported at 3.4%, in line with expectations and an increase from the previous month’s figure of 3.1%.
• Month-over-month (MoM) CPI is -0.3%, meeting expectations.

Core Measures:

• CPI Bank of Canada core YoY is 2.6%, down from 2.8% last month.
• CPI Bank of Canada core MoM is -0.5%, contrasting with the +0.1% reported in the last month.
• Core CPI MoM Seasonally Adjusted (SA) is +0.1%, a decrease from the +0.3% reported in the previous month.

Additional Core Measures:

• Trim CPI (a core measure) YoY is 3.7%, up from 3.5% last month.
• Median CPI YoY is 3.6%, an increase from the revised figure of 3.4% last month.
• Common CPI YoY is 3.9%, remaining unchanged from the previous month.

USD/CAD Live Chart