• The Canadian consumer price rate increases in January by 1.8%.
• The Canada Bank lowered the interest rate by 25 base points in January.
• The Canadian dollar maintains the area of ​​annual ups compared to the American dollar.

On Tuesday, Statistics Canada will reveal its latest inflation report for January, based on data from the consumer price index (CPI). Early forecasts suggest that the headline inflation remained at 1.8% compared to January last year.

In addition, Bank of Canada (BOC) also enters the spotlight delicate with basic CPI data, which limits more unpredictable items such as food and energy. In the case of a bit of context: the December CPI was dived by 0.3% compared to the previous month, although it still meant an augment of 1.8% compared to the year earlier, while the inflation of the header increased by 1.8% per year and fell by 0 , 4% every month.

These numbers have the potential for influence on the Canadian dollar (CAD). The BOCT approach to interest rates is crucial here. From the time it began in June 2024, the central bank reduced the policy rate by 200 base points, lowering it to 3.00% to 29 January.

Meanwhile, CAD has been on a positive driving, constantly recovering the value in the last few weeks. In fact, USD/CAD fell to two -month minima last week, visiting the 1.4150 region again and expanding its rejection from the annual peaks around the 1,4800 barrier registered at the beginning of the month.

What can we expect from the foot of Canada inflation?

According to the protocol from the meeting published on February 12, a reduction in the rate of 25 base points caused concerns about tariff threats and the desire to strengthen growth. Last month, Bank of Canada noticed that a indefinite threat of tariffs was to cover his forecasts, and members admit that it is impossible to predict the commercial policy in the USA.

After the last BOC meeting, on January 29, the Governor Tiff Mackl said that a significant augment in tariffs would initially augment prices – as a consequence inflation – up, noticing that delays in monetary policy meant that little could be done about this immediate effect. He explained that the key problem was to prevent the spread of the initial price augment to other prices and payroll, which can lead to indefinite inflation. He emphasized that although the inflation is expected to augment, it was focused on ensuring its final return to 2%, because permission to continuous growth would not be good for Canadians.

Data preview of the BBH Analysts notes: “CPI data was awarded in January in January on Tuesday. The header is expected for 1.9% y/r vs. 1.8% in December, the median core is to remain constant at 2.4% y/y, and the spinal finish is expected to 2.6% y/r vs. 2.5% in December. Holidays GST/HST (from December 14, 2024 to February 15, 2025) will stop inflation in January, especially in categories such as food services and semi -permanent goods. Bank of Canada designs the header and basic CPI inflation to an average of 2.1% and 2.5% compared to Q1. BOC takes place for further alleviation, although at a more gradual pace, because inflation lasts about 2% from August. The market valuation in 50 BP facilitates over the next 12 months, in which the policy rate would be at the bottom 2.50%. “

When is CPI canada due and how can it affect USD/CAD?

The inflation report in January in Canada will be published on Tuesday at 13:30 GMT, and all eyes will consist in whether the data cast any curves. If the numbers remain in expectations, the current forecasts of the Canada Bank will probably remain on the right track.

Meanwhile, USD/CAD has been trading a bear trend since the beginning of the month, falling as low as the zone 1.4150 on February 14 – the lowest level in the last few months. In addition, the couple withdrew the second week in a row, dropping almost 7 cents from year to year at the level of about 1,4800 registered earlier this month.

Pablo Piovano, a senior analyst from FXStreet, believes that despite continuous recovery, the Canadian dollar should remain under the pressure of the dynamics of the American dollar and tariff narrative in the medium period.

“Partisk trials should lead USD/CAD to a potential visit to the temporary 55-day SMA at 1.4305, before the highest level in 2025 of 1.4792 achieved on February 3,” explains Piovano.

On the other hand, there is initial support around the lower part 1.4150 2025 (registered on February 14), followed by a short-lived 100-day SMA at 1.4090 and a key psychological threshold 1.4000. Violation of the latter can cause additional pressure on sale. According to Piovano, the goals would be aimed at a significant 200-day SMA at 1.3816, followed by the lowest level of 1.3823 in November, and finally the lowest September level 1.3418.