Home Daily Commentaries USD/CAD dips as Canadian inflation heads in the right direction

USD/CAD dips as Canadian inflation heads in the right direction

Written by Christopher Celestino
| Wednesday 17 April, 2024

Daily Currency Update

The USD/CAD pair was down 0.16% this morning to the 1.3805 level amid positive inflation data. Bank of Canada (BoC) Governor Tiff Macklem noted that while inflation was trending in the right direction with a positive risk sentiment, rates won’t ease until inflation reaches a sustainable 2% level. The Federal Budget levels met expectations with capital gains tax increasing. This drew significant attention and could potentially impact business and investments throughout the country. In oil news, West Texas Intermediate (WTI) crude oil was down around 1.8% this morning near $83.13 per barrel.

Key Movers

The USD traded lower this morning despite cautious comments from Federal Reserve Chairman Jerome Powell. He noted interest rates could stay unchanged as the 2% inflation target is taking “longer than expected” to reach. The US Dollar Index (DXY) traded lower for the first time since last Monday near 106.165 after hitting around the 106.517 level yesterday. Despite this minor dip, the dollar’s rally seems likely to continue as recent data confirmed persistent inflation. This firm position limited expectations for rate cuts in the near future, propelling the USD’s status as a preferred safe haven currency.

The EUR was slightly up today, maintaining support around the low 1.06 range despite the USD’s strength. Final Eurozone Consumer Price Index (CPI) data for March remained unchanged at 2.4%. European Central Bank (ECB) President Christine Lagarde is set to speak today about inflation in the Eurozone.

Nearby in the UK, CPI data rose by 3.2% in the 12-month periods before March 2024. This was down from 3.4% in February, which showed UK inflation trending in the right direction. The GBP performed well due to the CPI exceeding expectations and lessening market anticipation for Bank of England (BoE) rate cuts.

Expected Ranges

  • EUR/CAD: 1.46696 - 1.46994 ▲
  • GBP/CAD: 1.71704 - 1.72340 ▼
  • AUD/CAD: 0.884870 - 0.888310 ▲
  • USD/CAD: 1.37832 - 1.38377 ▼