Canadian Dollar climbs against softening Greenback as US CPI inflation cools
- Canadian Dollar weaker on Wednesday but climbs over retreating USD.
- Canada housing and manufacturing figures mixed with little impact.
- Easing US inflation renews September rate cut hopes.
The Canadian Dollar (CAD) is broadly softer on Wednesday as one of the day’s weakest performers, but the CAD will have to settle for second-worst as the US Dollar (USD) broadly retreats following a cooler-than-expected print of US Consumer Price Index (CPI) inflation. Easing inflation pressure is reigniting broad-market hopes for rate cuts from the Federal Reserve (Fed) in September.
Canada saw a slight decrease in the number of Housing Starts for the year through April, though the figure came in higher than expected. Canadian Manufacturing Sales also contracted more than expected in March. Despite misfires, Canadian economic data is strictly low-tier on Wednesday with markets squarely focused on US CPI inflation.
Daily digest market movers: CAD softens on Wednesday, but USD softer
- MoM US CPI inflation in April cooled to 0.3% from the expected hold at 0.4%, reigniting risk appetite and sending Greenback to floorboards.
- Core US CPI inflation for year through April also cooled, printing at the average forecast of 3.6% compared to previous period’s 3.8%.
- Easing inflation pressures are stoking investor hopes for a Fed rate cut in September; according to the CME’s FedWatch Tool, rate markets are pricing in 71% odds of at least a 25-basis-point rate trim.
- US Retail Sales in April also printed below expectations at a flat 0.0%, worse than the forecasted tick down to 0.4% from the previous 0.6% (revised from 0.7%).
- Easing Retail Sales figures add to market hopes for rate cuts as the US economy cools off.
- Canadian Housing Starts for the year ended April by easing to 240.2K, above the forecast for 238K but still back slightly from the previous figure of 242.3K.
- Canadian Manufacturing Sales for March declined -2.1%, worse than expected -1.4%. The previous month’s physical inventory sales were revised slightly higher to 0.9% from 0.7%.
Canadian Dollar PRICE Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.46% | -0.62% | -1.01% | -0.31% | -0.81% | -1.10% | -0.37% | |
| EUR | 0.46% | -0.16% | -0.56% | 0.12% | -0.39% | -0.63% | 0.08% | |
| GBP | 0.62% | 0.16% | -0.41% | 0.29% | -0.22% | -0.48% | 0.26% | |
| JPY | 1.01% | 0.56% | 0.41% | 0.69% | 0.20% | -0.10% | 0.66% | |
| CAD | 0.31% | -0.12% | -0.29% | -0.69% | -0.51% | -0.77% | -0.04% | |
| AUD | 0.81% | 0.39% | 0.22% | -0.20% | 0.51% | -0.28% | 0.47% | |
| NZD | 1.10% | 0.63% | 0.48% | 0.10% | 0.77% | 0.28% | 0.74% | |
| CHF | 0.37% | -0.08% | -0.26% | -0.66% | 0.04% | -0.47% | -0.74% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Technical analysis: Canadian Dollar finds technical barriers limiting gains against Greenback
The Canadian Dollar (CAD) is broadly weaker on Wednesday, shedding weight against all of its major currency peers except for the even weaker US Dollar. The CAD is down nearly seven-tenths of one percent against the Japanese Yen (JPY) but up over a quarter of one percent against the Greenback.
USD/CAD tumbled into the low side of a near-term demand zone, testing the 1.3600 handle but unable to develop further bearish legs. Accelerating declines have the pair pinned below the 200-hour Exponential Moving Average (EMA) at 1.3678, and a further move lower could be on the cards if bidders remain uninterested in defending 1.3600 to 1.3620.
Recent losses are beginning to pile up with USD/CAD on pace to close in the red for a sixth consecutive trading day. The pair has broken into the bearish side of the 50-day EMA at 1.3638, and the immediate price floor underneath daily candlesticks sits at the 200-day EMA at 1.3546.
USD/CAD hourly chart
USD/CAD daily chart
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.