Canadian CPI Overview
Wednesday's Canadian economic docket features the key release of consumer inflation figures for July, scheduled to be published at 12:30 GMT. The headline CPI is anticipated to have edged up by 0.2% in July, while the yearly is seen falling further to 1.7% from 2.0% recorded in the previous month. Meanwhile, the BoC's core CPI is expected to rise by 0.2% on a monthly basis and to 2.3% yearly rate during the reported month.
Meanwhile, analysts at Wells Fargo expect the annual rate to drop to 1.6% and explained - “Lower oil and broader energy prices are likely to weigh on CPI in July, and we forecast headline CPI inflation to slow to 1.8% in 2019 and pick up slightly in 2020.”
“As for upside inflation risks, core inflation may show resilience in July after the latest average hourly earnings figure quickened and Canada’s economy grew for the third consecutive month in May, providing further evidence of a stronger Canadian economy. Even though Canadian job creation slowed in July, the labor market remains strong and provides an additional upside risk for inflation.”
Deviation impact on USD/CAD
Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction on the pair is likely to be around 43-pips during the first 15-minutes and could get extended to 66-pips in the following 4-hours in case of a relative deviation of -0.86. Alternatively, the reaction to a higher than expected reading, with a relative deviation of +0.68 or higher could be around 61-pips in the first 15-minutes and 75-pips in the following 4-hours.
How could it affect USD/CAD?
Ahead of the important releases, the USD/CAD pair pulled away from two-month tops set in the previous session and was seen flirting with the 1.3300 round figure mark. A softer reading will be enough to provide the required momentum that should assist the pair to surpass the 1.3345 supply zone and aim towards reclaiming the 1.3400 round figure mark en-route the next major hurdle near the 1.3415-20 region.
Alternatively, a stronger reading might prompt some additional long-unwinding trade and accelerate the slide back towards the 1.3260-50 support area, albeit any subsequent slide is likely to be limited ahead of Wednesday's key event risk - the release of the latest FOMC policy meeting minutes - due later during the US trading session.
Key Notes
• Canadian CPI to drop sharply in July – Scotiabank
• USD/CAD Analysis: nears resistance cluster at 1.3340
• USD/CAD extends pullback as WTI remains firm, Canadian CPI/FOMC in the spotlight
About BoC's Core CPI
Consumer Price Index Core is released by the Bank of Canada. “Core” CPI excludes fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products. These volatile core 8 are considered as the key indicator for inflation in Canada. Generally speaking, a high reading anticipates a hawkish attitude by the BoC, and that is said to be positive (or bullish) for the CAD.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.