Inflation in Canada is lifting its head: CPI is up 0.1% m/m and 2.4% y/y. Core COI is up 0.3% and 2.3% y/y. This is a beat. While a rate hike is not on the cards, the BOC could change its stance.
USD/CAD is trading lower, getting closer to 1.12. Update: the pair is dipping below this line.
Further support awaits at 1.1111 which is 0.90 on CAD/USD. Resistance is at 1.1250, which was pierced through with a lot of momentum. See the Canadian $ forecast for more.
Canada was expected to report a drop of 0.3% in CPI and a rise of 0.2% in Core CPI, month over month. Year over year, a rise of 2.1% was expected in headline inflation and 2.2% in core inflation.
USD/CAD traded around 1.1255 before the release, already down from around 1.13.
The Canadian dollar already got a boost earlier from the Chinese announcement on a rate cut. This helped all commodity currencies.
The Bank of Canada recently made a subtle change to its neutral stance, basically accepting that the picture of inflation has changed.
Here is how it looks on the 30 minute chart. The pair extends its falls.
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