Lackluster Canada CPI To Keep USD/CAD Rate Within Monthly Range

A 0.4% rise in Canada Retail Sales paired with another 2.3% print for the Consumer Price Index (CPI) may continue to foster range-bound prices in USD/CAD as it does little to alter the outlook for monetary policy.

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Recent comments from the Bank of Canada (BoC) suggests the central bank will look through the stickiness in price growth as ‘the transitory impact of higher gasoline prices and recent minimum wage increases will likely cause inflation in 2018 to be modestly higher than the Bank expected in its January Monetary Policy Report (MPR),’ and Governor Stephen Poloz and Co. may stick to the sidelines at the next meeting on May 30 as ‘some monetary policy accommodation will still be needed to keep inflation on target.’ With that said, a set of lackluster data prints may fuel a larger rebound in USD/CAD as it encourages the BoC to retain the current policy for the foreseeable future.

However, a batch of above-forecast reading may undermine the recent rebound in USD/CAD as it puts pressure on the BoC to further normalize monetary, and the pair may ultimately threaten the range-bound price action from earlier this year as market participants boost bets for an imminent rate hike.

IMPACT THAT CANADA CPI HAS HAD ON USD/CAD DURING THE PREVIOUS RELEASE

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

MAR

2018

04/20/2018 12:30:00 GMT

2.4%

2.3%

+87

+134

March 2018 Canada Consumer Price Index (CPI)

USD/CAD5-Minute Chart

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Canada’s Consumer Price Index (CPI) showed a marginal rise in March, with the headline reading climbing to an annualized 2.3% from 2.2% the month prior. A deeper a look at the report showed Transportation prices increasing 5.3% per annum to lead the advance, with the cost for healthcare also climbing an annualized 2.3%, while prices for clothing/footwear narrowed 0.1%during the same period.

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