- Canadian Dollar pares back some of last Friday’s gains ahead of Canadian CPI on Tuesday.
- Monday’s economic calendar has a thin docket, but key data to wrap up 2023 due this week.
- CAD and crude Oil diverge as WTI recovers some ground on Monday.
The Canadian Dollar (CAD) is pulling back in the bids to kick off the last two weeks of trading in 2023, with a final print of StatsCAN’s Canadian Consumer Price Index (CPI) inflation on the docket for Tuesday.
On top of muddying the waters by reporting its own version of Canadian CPI on Tuesday, the Bank of Canada (BoC) will publish its latest Summary of Deliberations on Wednesday. Thursday’s Canadian Retail Sales and Friday’s Canadian Gross Domestic Product (GDP) will be overshadowed by counterpart US data punching in a higher weight class.
Daily Digest Market Movers: Canadian Dollar markets coil ahead of 2023’s final inflation print
- Monday opens quietly heading into the final turn of the trading year.
- The CAD is paring back slightly on Monday, falling or flattening against nearly all other major currencies.
- The Loonie slipped one tenth of one percent against the US Dollar (USD) but climbed a third of a percent against the Japanese Yen (JPY) as the Yen outpaced the Canadian Dollar to be the weakest currency in Monday trading.
- Canadian Consumer Price Index inflation on Tuesday is expected to show further cooling in consumer-facing prices, with the YoY figure forecast to tick down from 3.1% to 2.9%. November’s MoM CPI is also expected to see a return to cooling territory, slated to fall to -0.2% from October’s 0.1%.
- The BoC’s Summary of Deliberations is due on Wednesday but is unlikely to reveal much new information that wasn’t already discussed at length by BoC Governor Tiff Macklem at last Friday’s speaking event.
- BoC Macklem: It’s still too early to consider cutting our policy rate
- Thursday’s Canadian Retail Sales for October are forecast to improve to 0.8% from September’s 0.6%, and Friday’s Canadian Gross Domestic Product print is forecast to round out the trading year with an upbeat expectation of 0.2% in October versus September’s 0.1%.
Canadian Dollar price today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.27% | 0.22% | 0.10% | -0.04% | 0.43% | 0.04% | -0.29% | |
| EUR | 0.27% | 0.49% | 0.38% | 0.23% | 0.70% | 0.32% | -0.02% | |
| GBP | -0.21% | -0.48% | -0.11% | -0.25% | 0.22% | -0.17% | -0.52% | |
| CAD | -0.10% | -0.38% | 0.11% | -0.15% | 0.32% | -0.07% | -0.40% | |
| AUD | 0.03% | -0.23% | 0.25% | 0.15% | 0.47% | 0.08% | -0.26% | |
| JPY | -0.43% | -0.70% | -0.20% | -0.31% | -0.47% | -0.39% | -0.74% | |
| NZD | -0.04% | -0.31% | 0.18% | 0.07% | -0.08% | 0.37% | -0.33% | |
| CHF | 0.30% | 0.03% | 0.52% | 0.41% | 0.26% | 0.72% | 0.35% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Technical Analysis: The Canadian Dollar’s Monday pause could give way to full-blown pullback if Greenback bidders catch Loonie bulls with their pants down
Monday sees the Canadian Dollar pulling back into 1.3400 against the US Dollar in a slight paring back from recent bullish momentum. The Canadian Dollar’s three-day bull run last week saw the USD/CAD tip into multi-month lows near 1.3350 after falling from last week’s highs near the 1.3600 handle.
The pair is down over three and a half percent from November’s early high just below 1.3900, but last week’s clean break of the 200-day Simple Moving Average (SMA) near 1.3500 could see the USD/CAD primed for a pullback.
If Loonie bidding doesn’t return meaningfully to push the pair back down to 2023’s bottom bids near 1.3100, the ceiling on a bullish rebound for the Greenback might not firm up until bids return to the 50-day SMA descending into 1.3650.
USD/CAD Hourly Chart
USD/CAD Daily Chart
(this article was corrected on December 18 at 18:30 GMT to say, in the first paragraph of the Technical Analysis section, that the USD/CAD hit multi-month lows near 1.3350, not multi-month highs.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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