The USDCAD exchange rate will face inflation data on Wednesday, which could be a market mover.
The inflation number is expected to dip by 0.2%, but the actual figure could push traders to reassess their outlooks.
USDCAD – Daily Chart
USDCAD trades at 1.3640 and has support at the 1.3500 level. Overhead resistance comes in at 1.3837. If the 1.3500 support gives way, a further pullback to 1.3225 is possible.
If the Canadian inflation number drops, it will take the pressure off the US dollar, which has been struggling with the dovish Federal Reserve rate hike outlook.
On the Canadian front, oil has been a dampener on gains but this week saw Russian exports to the EU drop by more than half. That could signify further tightening of supplies. We will also have US inventories tomorrow from the EIA, which are expected to show a stock draw. The oil market outlook could boost the Canadian dollar and bring the market to support levels.
The yearly inflation rate for Canada is expected to come in at 6.7% against the previous 6.9%. The Bank of Canada has hiked rates this year from 0.25% to 4.25%. That is just shy of the Fed’s 4.5% level, and a stubborn inflation reading could see a surge in CAD.
Inflation has shown signs of slowing in the US, with the President saying, “In a world where inflation is rising at double digits in many major economies around the world. Inflation is coming down in America.”
The US economy will see the release of consumer confidence figures on Wednesday. A final reading of GDP on Thursday will be followed by data on Friday in the form of PCE pricing data, durable goods orders, and Michigan consumer confidence.
