- Annual core CPI in Canada is expected to remain steady at 1.9% in November.
- US Dollar Index posts modest daily gains near 97.30.
- WTI continues to trade above $60 ahead of weekly EIA data.
The USD/CAD pair posted small losses on Monday and Tuesday and continued to inch lower on Wednesday ahead of key inflation data from Canada. As of writing, the pair was down 0.06% on the day at 1.3150.
Eyes on Canada CPI data
Investors expect the Consumer Price Index (CPI) to decline 0.1% on a monthly basis in November but see the core CPI, which excludes volatile food and energy prices, to remain unchanged at 1.9% on a yearly basis. If the data points out to softening inflation, this could suggest that the Bank of Canada could adopt a more dovish stance and cause the CAD to come under pressure.
In the meantime, crude oil’s upbeat performance since the start of the week helped the CAD stay strong against the USD. The barrel of West Texas Intermediate on Tuesday advanced above $61 for the first time since mid-September but now seems to be staying in a consolidation phase around mid-$60s ahead of the Energy Information Administration’s weekly crude oil stock report.
On the other hand, supported by the upbeat Industrial Production data from the US on Tuesday, the US Dollar Index inched higher and helped the pair limit its losses. At the moment, the index is 97.30, adding 0.12% on the day. There won’t be any macroeconomic data releases featured in the US economic docket and participants will look into Chicago Fed President Charles Evans’ speech for fresh clues regarding the Fed’s monetary policy outlook.
Technical levels to watch for
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