USDCAD above 1.34 after mixed messages from CAD data


  • Canadian inflation ticks higher

  • But core retail sales disappoint

  • USDCAD move back above the 1.34 handle


The main economic releases of this afternoon come from Canada, with the latest inflation data beating forecasts but consumer spending softening which has sent mixed messages for the USDCAD as the pair moves back above the 1.34 handle. The CPI Y/Y rose by 1.5% in February, up from a previous reading of +1.4% and above the 1.4% consensus forecast. In terms of a core reading, traders look to 3 separate measures which came in as follows:

  • CPI common Y/Y: +1.8% vs +1.8% exp and 1.9% prior

  • CPI core Y/Y: +1.8% vs +1.8% exp and 1.8% prior  

  • CPI trim Y/Y: +1.9% vs +1.8% exp and 1.9% prior


On balance these could be seen as mildly positive for CAD with the trim beating forecasts in remaining at 1.9%, but overall there isn’t much new to go on here.

There was little real change in the Canadian inflation metrics on the whole, with the average of the 3 core CPI measures still near the middle of the BoC’s 1-3% inflation target. Source; XTB Macrobond


At the same time as the inflation figures there was the most recent retail sales date out, with an unexpected drop of 0.3% M/M seen in January.This was well below the +0.4% expected and there was also a negative revision to the prior release which now stands at -0.8% after -0.7% initially.  A core reading which strip out car sales, came in at 0.1% M/M as expected, but the prior month was revised lower to -0.8%. The revisions here make the latest releases worse than they appear and on the whole it’s a bit of a disappointing update on the consumer.

Retail sales have dipped lower in the latest release with consumer spending falling quite sharply in the past couple of years. Source: XTB Macrobond

USDCAD is moving firmly higher for the second consecutive day, but the gains have come more from a strength in the former than a weakness in the latter. 23.6% fib at 1.3453 could now be in the sights of longs. Source: xStation

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