Back
21 Jun 2013
Canadian CPI next: Impact on USD/CAD
FXstreet.com (Córdoba) - Statistics Canada will release the national Consumer Price Index for May at 12:30 GMT, with the figures taking special attention after BoC Poloz said the 2% target is "sacrosanct" to the BoC.
May CPI expected to come in at 0.9% at an annualized pace, while core rate is forecast at 1.2%, both well under Bank of Canada's 2% target.
According to Valeria Bednarik, chief analyst at FXstreet.com, as inflation has been cooling down lately tightening doesn’t seem the best policy the BOC can apply at the moment, "so some improvement in the numbers should be positive for the currency, as it will let the Central Bank maintain its current policy", Bednarik says. "However the reading needs to be well above expected to actually affect the dominant trend in CAD crosses".
On the other hand, worse than expected numbers Canadian dollar will likely close the week near fresh yearly lows particularly against the dollar, notes the analyst. "If market remains in risk aversion mode and yen strengthening, CAD/JPY will be the pair to watch with the news".
USD/CAD is trading at the 1.0380 area ahead of the data, with immediate resistances at 1.0400 and 1.0420, its 2013 high. Meanwhile support are seen at 1.0300 (psychological level) and 1.0265 (Jun 20 low).
May CPI expected to come in at 0.9% at an annualized pace, while core rate is forecast at 1.2%, both well under Bank of Canada's 2% target.
According to Valeria Bednarik, chief analyst at FXstreet.com, as inflation has been cooling down lately tightening doesn’t seem the best policy the BOC can apply at the moment, "so some improvement in the numbers should be positive for the currency, as it will let the Central Bank maintain its current policy", Bednarik says. "However the reading needs to be well above expected to actually affect the dominant trend in CAD crosses".
On the other hand, worse than expected numbers Canadian dollar will likely close the week near fresh yearly lows particularly against the dollar, notes the analyst. "If market remains in risk aversion mode and yen strengthening, CAD/JPY will be the pair to watch with the news".
USD/CAD is trading at the 1.0380 area ahead of the data, with immediate resistances at 1.0400 and 1.0420, its 2013 high. Meanwhile support are seen at 1.0300 (psychological level) and 1.0265 (Jun 20 low).