CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Canadian CPI falls at fastest level since April 2020

January 17, 2023 8:50 PM

Expectations are for the Bank of Canada to hike 25bps when the central bank meets next week to discuss monetary policy.  The December CPI showed inflation at 6.3% YoY, much higher than the BoC’s 2% target.  However, the YoY print dropped from 6.8% YoY in November vs an expectation of 6.4% YoY.  In addition, as with the US CPI, it’s the MoM rate that people are talking about.  The December CPI MoM dropped -0.6% vs a prior reading of 0.1% and an expectation of -0.5%.  This was the largest drop in the month-over-month series since April 2020.  So, although inflation is dropping, it still may be too high for the Bank of Canada.  Also recall that Canada’s December Employment Change was very strong, with the economy adding  104,000 jobs vs an expectation of only 8,000 jobs.  Even better, over 84,500 of those jobs were full-time.  Although inflation is moving in the right direction for the BoC, the jobs data may give it the confidence to hike rates one more time.

Everything you need to know about the Bank of Canada

USD/CAD had slowly been moving higher throughout 2022 until the pair broke above resistance at 1.3223 on September 15th.  USD/CAD then quickly moved higher to the 2022 highs on October 13th at 1.3976.  The pair then formed a head and shoulders pattern but failed to break through support on its way to target.  USD/CAD bounced to the 61.8% Fibonacci retracement level from the October 13th, 2022 high to the previous support level, at 1.3690.  This set up the current AB=CD pattern.  The target for the pattern is near 1.2950.

Source: Tradingview, Stone X

 

Trade USD/CAD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

 

On a 240-minute timeframe, first support is at the lows of January 13th at 1.3321.  Below there, price can move to the long-term support line at 1.3224, the 200 Day Moving Average at 1.3174 (see daily), and then the psychological round number support level at 1.3000, ahead of the target.  However, if USD/CAD bounces, first resistance is at the highs of January 12th at 1.3458.  Above there, price can move to the 50 Day Moving Average at 1.3492 (see daily), then the highs from December 16th, 2022, at 1.3705.

Source: Tradingview, Stone X

Canadian CPI for December was better than expected, and much lower than that of November.  In addition, the MoM print was the largest negative print since May 2020.  Will this be enough for the BoC to hold on rates when it meets next week?  With a headline print still at a very high reading of 6.3% YoY and strong jobs data, the BoC is still expected to hike 25bps.

Learn more about forex trading opportunities.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024