Home Daily Commentaries CAD falls from 12-day high after release of U.S. inflation data

CAD falls from 12-day high after release of U.S. inflation data

Daily Currency Update

Tuesday saw the Canadian dollar drop against the US dollar, retracting from its strongest point in nearly two weeks. This was caused by lower oil prices and investors interpreting mixed US inflation data. US annual Consumer Price Index (CPI) declined to 6.4% in January. This reading came in higher than the market expectation of 6.2%. USD/CAD is trading around the 1.33200 mark.

Sliding crude oil prices could further undermine the commodity-linked Canadian dollar and help limit the downside for the USD/CAD pair. Economists anticipate the tightening of the oil market this year which may eventually put prices on an upward trajectory and, as a result, cause the Loonie to move. Projected oil demand figures are near the 103-107 range. West Texas Intermediate is trading around the 79.500 mark today.

Key Movers

EUR/USD has retraced a small portion of the initial post-CPI spike to 1.0800 but has managed to hold above 1.0750. Meanwhile, in the UK, data showed in basic pay rates increased again in the last 3 months of 2022 even though the labor market cooled. The pace of pay growth in Britain is being monitored closely by the Bank of England as it gauges how much higher to raise interest rates. After a constant rollercoaster ride over the last several months, the GBP/USD has returned to 1.2200 following the wild reaction to the US CPI.

Expected Ranges

  • EUR/CAD: 1.4286 - 1.4362 ▲
  • GBP/CAD: 1.6174 - 1.6292 ▼
  • AUD/CAD: 0.9268 - 0.9325 ▼
  • USD/CAD: 1.3309 - 1.3366 ▼