USDCAD retests trendline after inflation data


  • Canadian CPI Y/Y as expected at 1.4%; 2.0% prior

  • Core readings all unchanged as forecast

  • USDCAD retests rising trendline


The main economic data of the afternoon comes from Canada with the latest look at price pressure in the country showing little by the way of surprises. The headline CPI for January came in as expected at 1.4% Y/Y, marking a sizable drop on the 2.0% seen last time out. Looking at the M/M figures, there was a little bit of softness with an increase of 0.1% less than the +0.2% expected and up from -0.1% previously. On the whole there’s little to go off here really, with a small miss in the M/M reading, which by nature is quite volatile and unpredictable not enough to provide any real suggestions of a change in the inflationary environment.

Despite a fair sized drop in the headline CPI year on year, the average of the 3 core measures has remained remarkably flat around the middle of the BOC 1-3% target for some time now and suggests that inflation is stable and little changed. Source: XTB Macrobond


Canada’s system of data releases sees three readings announced as “core” measures and these were as follows:

  • Common CPI Y/Y: 1.9% vs 1.9% exp and 1.9% prior

  • Median CPI Y/Y: 1.8% vs 1.8% exp and 1.8% prior

  • Trimmed CPI Y/Y: 1.9% vs 1.9% exp and 1.9% prior     


As you can clearly see, these were all unchanged from last time out and inline with forecasts, so provide very little to go off. The mean average of these measures remains 1.9% (due to rounding), which is close to the midpoint of the Bank of Canada’s inflation target which is from 1-3%.

USDCAD is once more testing a rising trendline going back to the start of last year. Source: xStation


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