⚡Crypto Alert : Altcoins are up 28% in just last month! Unlock gains and start trading now - Click Here

CAD Tumbles As Inflation Falls in Canada

USD/CAD trading above 1.35 again

The US and Canada return from the bank holiday weekend today with inflation coming out from Canada earlier toda. Market forecasts were for a 3.3% year-on-year inflation and 0.4% month-on-month increase in January CPI, however we saw a decline in both numbers.

While core numbers in the previous month’s report were generally higher, the overall trend has shown improvement. The market was pricing in a 20% likelihood of a rate cut at the Bank of Canada (BOC) March meeting, gradually increasing to a full rate cut being factored in by July. But, we saw a larger slowdown today, with Canada CPI YoY falling from 3.4% to 2.9% while CPI MoM fell flat at 0.0%, which sent the CAD lower across the board, with the USD to CAD rate jumping 50 pips higher.

BrokerReviewRegulatorsMin DepositWebsite
🥇Read ReviewASIC, FSA, CBI, BVI, FSCA, FRSA, CySEC, ISA, JFSAUSD 100Visit Broker >>
🥈Read ReviewFMA, FSAUSD 50Visit Broker >>
🥉Read ReviewFSCA, CySEC, DFSA, FSA, CMAUSD 0Visit Broker >>
4Read ReviewSFSA, FSCA, CySec*USD 5Visit Broker >>
5Read ReviewFCA, CySEC, FSCA, SCBUSD 100Visit Broker >>
6Read ReviewFCA, FINMA, FSA, ASICUSD 0Visit Broker >>
7Read ReviewCySEC, FCA, FSA, FSCA, Labuan FSAUSD 100Visit Broker >>
8Read ReviewNot Regulated0.001 BTCVisit Broker >>
9Read ReviewASIC, CySEC, FSCA, CMAUSD 100Visit Broker >>
10Read ReviewCySEC,MISA, FSCAUSD 20Visit Broker >>

Canadian January 2024 Inflation Report

  • Canada’s January CPI Yoy came in at 2.9% year-on-year, below the expected 3.3%
  • January CPI reading YoY was 3.4%.
  • The month-on-month CPI remained unchanged at 0.0%, falling short of the expected 0.4% increase.

Core measures of CPI also showed some moderation:

  • CPI Bank of Canada core year-on-year: 2.4% compared to the previous 2.6%
  • CPI Bank of Canada core month-on-month: +0.1% versus the prior -0.5%
  • Core CPI month-on-month seasonally adjusted: -0.1% compared to the previous +0.1%
  • Trimmed meand inflation: 3.4% versus the prior 3.7%
  • Median inflation: 3.3% versus the prior 3.6%
  • Common inflation: 3.4% versus the prior 3.9%

The headline CPI figure for Canada received a boost from a strong January 2023 reading, while the core CPI showed the opposite trend. However, there may be some support on both fronts starting in February, which could accelerate declines. Despite this, the Canadian dollar weakened across the board even without support. With this development, the Bank of Canada may have more leeway to cut rates sooner rather than later.

They may not hesitate to act if they are prudent. Market pricing for March has increased to 27% from 19% following the report, and year-end pricing stands at 76 bps compared to 64 bps prior to the release. Specifically, in January, CPI decreased by 4.0%, primarily due to declines in airfares (-14.3% month-on-month) and travel tours. Additionally, the cost of cell phones decreased year-over-year.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
Related Articles