The USD/CAD price rose to the highest level since August 8 ahead of the upcoming FOMC minutes and Canada consumer inflation data. The forex pair rose to 1.2935, which was about 1.65% above the lowest level this month.
Canada’s inflation and crude oil prices
The USD/CAD forex price rose as traders waited for the upcoming Canada inflation data. Economists expect the data to show that Canada’s inflation eased slightly in July. Precisely, they believe that the headline CPI dropped from 0.7% to 0.1% in July. This decline, in turn, is expected to have dropped from 8.1% in June to 7.6% in July.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
Excluding the volatile food and energy prices, analysts believe that the country’s inflation dropped from 6.2% to 6.0%. This decline likely happened because of the relatively low gasoline prices. Therefore, there is a likelihood that Canada’s inflation may have peaked.
The USD to CAD exchange rate will react to the latest housing starts data. Economists expect the numbers to reveal that the number of housing starts declined from 273.8k to 262.1k in July.
Still, the Bank of Canada (BoC) will likely continue hiking interest rates in September. The bank has delivered several hikes this year in its bid to fight the soaring inflation. It has managed to hike rates to 2.50%.
The USD/CAD price also rose as the price of crude oil retreated. Brent, the global benchmark, dropped to $92 while West Texas Intermediate (WTI) fell to $88. The Canadian dollar reacts to oil prices because the country is the third-biggest oil exporter in the world.
The next key catalyst for the pair will be the upcoming US retail sales data scheduled for Wednesday. The FOMC will also publish the minutes of the last meeting. These minutes will provide more color about the deliberations that happened in July.
USD/CAD forecast
The four-hour chart shows that the USD/CAD price bounced back as the US dollar rose. As it rose, it moved above the important resistance level at 1.2820, which was the lowest level on June 28th. It has risen above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) continued rising.
A closer look shows that the pair has formed a head and shoulders pattern. Therefore, the pair will likely have a bearish breakout in the coming days. If this happens, the next key support level to watch will be at 1.2765.
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 >
- Capital.com, simple, easy to use and regulated. Register here >
*Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.
Source: https://invezz.com/news/2022/08/16/usd-cad-forms-hs-ahead-of-canada-cpi-and-fomc-minutes/