Home » Canadian Dollar sees thin gains on quiet Monday as markets await US CPI inflation

Canadian Dollar sees thin gains on quiet Monday as markets await US CPI inflation

by FX BrokerNews
  • Markets are trading on the thin side as investors await key inflation print.
  • Canada has a lean schedule on the economic calendar this week.
  • CAD is softly higher across the board on quiet Monday but stuck on USD.

The Canadian Dollar (CAD) experienced a modest rebound on a subdued Monday, displaying gains against most major currencies as the broader market awaited cues from the upcoming US Consumer Price Index (CPI) inflation data scheduled for Tuesday. Despite a slight overall upward trend, the CAD remains closely tethered to the day’s opening levels against the US Dollar (USD).

Canada’s economic calendar for the week is relatively sparse, featuring only low-impact data releases in the latter part of the trading week, including Thursday’s January Manufacturing Sales and Friday’s Housing Starts for February. The focal points for the week’s key data are the US CPI inflation figures for February, anticipated to show a slight moderation. Additionally, Thursday will see the release of US Retail Sales and a Producer Price Index update.

Daily digest market movers: Markets huddle ahead of another go around the US CPI inflation wheel

  • On Monday, the New York Federal Reserve (Fed) reported an increase in US 3-year inflation expectations to 2.7% in February, up from the previous 2.4%. Similarly, 5-year inflation expectations rose to 2.9% from 2.5%, reflecting a decrease in consumer optimism about the future. Near-term inflation expectations remained at 3% in the aggregate.
  • According to a survey of economists, the Fed is anticipated to be the first among major central banks to cut rates, with 72 out of 108 responding economists predicting a first cut in June. In 2024, 52 economists expect the Fed to implement rate cuts totaling 75 basis points, while 26 anticipate a 100 basis point reduction.
  • Tuesday’s US Consumer Price Index (CPI) report is expected to present a mixed picture. The forecast indicates an increase in the month-on-month (MoM) headline CPI to 0.4% from the previous 0.3%. However, Core MoM CPI, which excludes volatile food and energy prices, is expected to decline to 0.3% from 0.4%. Year-on-year (YoY) CPI for the year ending February is expected to remain steady at 3.1%, while MoM Core CPI is projected to ease slightly to 0.3% from the previous 0.4%.
  • US CPI Preview: Forecasts from 10 major banks suggest that inflation remains elevated.

Canadian Dollar price today

The table below illustrates the percentage change of the Canadian Dollar (CAD) against various major currencies today. The Canadian Dollar exhibited strength particularly against the Pound Sterling.

Technical analysis: USD/CAD propped up by supply zone, but 1.3500 remains a tricky barrier

On Monday, the Canadian Dollar (CAD) showed overall strength, registering a 0.4% gain against the Pound Sterling (GBP) and approximately a 0.3% increase against the Australian Dollar (AUD). However, its performance against the US Dollar (USD) and the Japanese Yen (JPY) remained relatively stable.

USD/CAD experienced a late rebound on Friday from a familiar resistance area near 1.3440, yet the 1.3500 level poses a challenge for the pair, impeding a technical recovery towards last week’s highs around 1.3600. Despite a consistent pattern of higher highs, USD/CAD grapples with significant congestion in the midrange, cycling within a broad rising range.

The current fluctuation has USD/CAD entangled around the 200-day Simple Moving Average (SMA) at 1.3477 on Monday. The pair continues to navigate through a challenging range since reaching the 1.3500 region in January. A potential downside breach towards 1.3400 could expose the Loonie to further declines, targeting the lows from late 2023 near 1.3200. Conversely, the immediate resistance in the short term is situated at the 1.3600 level.

USD/CAD hourly chart

USD/CAD daily chart

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