The Canadian dollar depreciates on Tuesday following higher CPI inflation in Canada

Canadian Dollar vs. Greenback on Tuesday.
Canada recorded an raise in CPI inflation in May.
Additional emphasis will be placed on the July inflation print in the run-up to the BoC’s July interest rate call.

The Canadian dollar strengthened on Tuesday after Canadian Consumer Price Index (CPI) inflation rose in May. Despite the acute raise in CPI growth, the CAD fell against the US dollar during the US market session, setting a fresh 14-day high before settling back to flat levels on Tuesday.

Canada also saw a acute raise in the Bank of Canada (BoC) CPI reading in May. With CPI inflation rising sharply following the BoC’s recent interest rate cut, we will again focus on the upcoming June CPI print ahead of the Canadian central bank’s interest rate announcement scheduled for July 24.

Daily market movement summary: CPI raise in Canada causes CAD to raise

CPI inflation in Canada rose to 2.9% y/y in May, offsetting the forecast decline to 2.6% from the previous 2.7%.
M/M CPI rose to 0.6% in May, significantly exceeding the forecast of 0.3% and accelerating from the previous 0.5%.
BoC’s own Core CPI also rose to 0.6% m/m against forecasts remaining at 0.2%.
The acute rise in inflation in Canada follows the BoC’s recent interest rate cut, which may raise concerns that Canada’s central bank has started cutting interest rates too soon.
CB’s U.S. consumer confidence survey fell to 100.4 from 102.0, slightly better than the expected 100.0.

Canadian DOLLAR PRICE today

The table below shows the current percentage change of the Canadian Dollar (CAD) against the major listed currencies. The Canadian dollar was strongest against the euro.

	USD	EUR	GBP	JPY	BOOR	AUD	NZD	CHF
USD		0.27%	0.06%	0.08%	0.06%	0.28%	0.20%	0.21%
EUR	-0.27%		-0.22%	-0.21%	-0.22%	0.00%	-0.04%	-0.05%
GBP	-0.06%	0.22%		0.00%	0.00%	0.23%	0.19%	0.16%
JPY	-0.08%	0.21%	0.00%		-0.02%	0.22%	0.15%	0.15%
BOOR	-0.06%	0.22%	-0.01%	0.02%		0.21%	0.18%	0.16%
AUD	-0.28%	0.00%	-0.23%	-0.22%	-0.21%		-0.04%	-0.05%
NZD	-0.20%	0.04%	-0.19%	-0.15%	-0.18%	0.04%		-0.02%
CHF	-0.21%	0.05%	-0.16%	-0.15%	-0.16%	0.05%	0.02%

The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select the Canadian dollar from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent CAD (basis)/USD (quote).

Technical Analysis: The Canadian dollar is gaining in value as it declines, but gains remain muted

The Canadian dollar (CAD) briefly rose to a fresh two-week high against the U.S. dollar on Tuesday before returning to the daily opening range. The CAD also posted gains against the euro and Australian dollar, rising by around one-fifth of one percent against each.

USD/CAD fell to a fresh 14-day low at 1.3624 before recovering to Tuesday’s opening bids near 1.3660. The pair faces near-term change on the charts as bidders attempt to break through the intraday technical resistance at 1.3680.

Despite recovering from a -1.2% top-to-bottom decline from the early June high at 1.3791, it looks like the CAD will be poised to run out of gas against the US Dollar and the USD/CAD price will bottom out near 1.3650. The daily candles continue to follow a consolidation trend north of the 200-day exponential moving average (EMA) at 1.3582.

USD/CAD hourly chart

USD/CAD daily chart

Economic indicator

BoC Core Consumer Price Index (y/y)

BoC Core Consumer Price Index, published by Bank of Canada (BoC) shows price changes for Canadian consumers on a monthly basis by comparing the costs of a fixed basket of goods and services. It is considered a measure of core inflation because it excludes the eight most volatile components: fruits, vegetables, gasoline, heating oil, natural gas, mortgage interest, intercity transportation and tobacco products. A y/y reading compares prices in a reference month with the same month a year earlier. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.