Trading the News: Canada Consumer Price Index (CPI)
Updates to Canada’s Consumer Price Index (CPI) may undermine the recent strength in USD/CAD[1] as the headline reading for inflation is expected to uptick to 2.3% from 2.2% in May.
Signs of stronger price growth may encourage the Bank of Canada (BoC) to further normalize monetary policy in 2018 as the ‘Governing Council expects that higher interest rates will be warranted to keep inflation near target,’ and Governor Stephen Poloz & Co. may continue to strike a hawkish tone at the next meeting on September 5 as ‘CPI and the Bank’s core measures of inflation remain near 2 per cent, consistent with an economy operating close to capacity.’
In turn, a positive development may spark a bullish reaction in the Canadian dollar[2] as it puts pressure on the central bank to implement higher borrowing-costs, but another below-forecast CPI reading may fuel a larger advance in USD/CAD as it curbs bets for an imminent BoC rate-hike. Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE[3] for an opportunity to discuss potential trade setups!
Impact that Canada CPI has had on USD/CAD during the previous release
|
Period |
Data Released |
Estimate |
Actual |
Pips Change (1 Hour post event ) |
Pips Change (End of Day post event) |
|
MAY 2018 |
06/22/2018 12:30:00 GMT |
2.6% |
