The USD/CAD pair retreated slightly on Wednesday after the relatively strong Canadian consumer inflation data. It fell to a low of 1.2727, which was slightly below this week’s high of 1.2900.
Canada inflation data
Consumer inflation in Canada continued rising in February as energy costs jumped. According to Statistics Canada, the headline consumer inflation rose from 0.9% in January to 1.0% in February. This increase was higher than the median estimate of 0.9%.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
On a year-on-year basis, the CPI rose from 5.1% to 5.7%, which was the highest level in decades. It was also a higher growth rate than the median estimate of 5.5%.
Meanwhile, excluding the volatile food and energy products, inflation rose by 0.8% on a MoM basis and by 2.8% on a YoY basis.
Energy was the main driving force for the country’s inflation. In the past few months, we have seen the price of crude oil rise to over $130 per barrel. Natural gas has also jumped sharply.
These numbers came a few days after Canada published strong jobs data. According to Statistics Canada, the unemployment rate dropped from over 6% in January to about 5.5% in February as the country reopened.
Therefore, there is a likelihood that the Bank of Canada will maintain its hawkish stance in the coming months. It has already delivered the first 25 basis rate hike.
The USD/CAD pair also retreated after signs of hope emerged in Europe. According to the Russian foreign affairs minister, the two sides have made progress and are in the process of reaching a deal. It is unclear when this will happen.
The pair will next react to the upcoming interest rate decision by the Federal Reserve. Analysts expect that the Fed will deliver its first rate hike on Wednesday.
USD/CAD forecast
The four-hour chart shows that the USD/CAD pair retreated slightly after the strong Canadian inflation data. On the four-hour chart, it has moved below the key resistance level at 1.2900, where it has struggled to move above in the past few months.
The pair has moved below the 25-day and 50-day moving average. At the same time, it seems like it has formed both a head and shoulders and ascending triangle patterns. Therefore, the outlook for the pair is neutral because these patterns tend to send a different picture. A bullish trend will be confirmed if the price moves above 1.2900.
Where to buy right now
To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:
- Etoro, trusted by over 13m users worldwide. Register here >
- bitFlyer, simple, easy to use and regulated. Register here >
Source: https://invezz.com/news/2022/03/16/is-the-usd-cad-a-sell-after-the-strong-canada-inflation-data/