Traders of the Canadian dollar are bracing for further moves in the currency later today as the latest CPI data is released. Over the weekend, Bank of Canada Governor Tiff Macklem indicated that falling oil prices and concerns in the labour market may prompt quicker rate cuts from the central bank. Should today’s CPI data come in lower than expected, confirming weaker inflationary pressures, the Loony could face additional downward pressure.
Market expectations point to a 0.2% month-on-month increase in the headline CPI, with the year-on-year median CPI projected at 2.2%. Any figures falling short of these forecasts are likely to trigger significant movements in the currency.
The Loony is one of the few major currencies that has depreciated against the US dollar in recent days, weighed down by lower oil prices. It is currently trading around 1.3590, just below a recent high and trendline resistance on the hourly chart. A weaker CPI print could push the pair into higher ranges, though tomorrow’s US Federal Reserve decision will play a key role in determining the longevity of such a move. Conversely, a higher-than-expected CPI print could lead to buying interest in the CAD, pulling the pair back into recent ranges, with initial support now lying at the 200-day moving average of 1.3565.
Resistance 2: 1.3622 – September High
Resistance 1: 1.3606 – Trendline Resistance
Support 1: 1.3565 – 200-Day Moving Average
Support 2: 1.3462 – Trendline Support
