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When is Canadian CPI report and how could it affect USD/CAD?

Canadian CPI Overview

Wednesday's Canadian economic docket highlights the key release of domestic consumer inflation figures for December, scheduled to be published at 13:30 GMT. The headline CPI is anticipated to have edged higher by 0.1% during the reported month as compared to a 0.1% fall recorded in the previous month. Meanwhile, the yearly rate is anticipated to hold steady at 2.2%, while the BoC's core CPI is also expected to hold steady at 1.9%.

How could it affect USD/CAD?

Ahead of the important releases, the USD/CAD pair was seen retreating from the vicinity of the 1.3100 handle, or two-week tops, albeit remained well within a familiar trading range. A stronger reading might be enough to provide an additional boost to the Canadian dollar and prompt some selling, forcing the major to retest the 1.3035-30 strong horizontal support. Some follow-through selling has the potential to drag the pair further towards the key 1.30 psychological mark.

Conversely, a softer reading might provide a modest lift to the major, though bulls are likely to wait for some strong follow-through buying beyond the monthly swing high resistance near the 1.3100 round-figure mark. Above the mentioned handle, the pair is likely to aim back towards challenging the 1.3165-70 supply zone. Meanwhile, barring the immediate knee-jerk reaction, the pair might remain well within the recent trading range as investors might refrain from placing aggressive bets ahead of the latest monetary policy update by the Bank of Canada (BoC).

Key Notes

   •  USD/CAD eases from 2-week tops, focus on Canadian CPI/BoC decision

   •  USD/CAD Analysis: could edge lower

   •  USD/CAD Price Analysis: Remains confined in a multi-day old trading range, below 1.3100 mark

About BoC's Core CPI

Consumer Price Index Core is released by the Bank of Canada. “Core” CPI excludes fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products. These volatile core 8 are considered as the key indicator for inflation in Canada. Generally speaking, a high reading anticipates a hawkish attitude by the BoC, and that is said to be positive (or bullish) for the CAD.

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