Home Daily Commentaries USD/CAD spikes after unimpressive inflation data

USD/CAD spikes after unimpressive inflation data

Tuesday 21 February, 2023

Daily Currency Update

USD/CAD spikes to the top end of its daily range in reaction to softer Canadian Purchasing Managers’ Index (PMI) data. The pair is currently trading just below the 1.3500 level, up around 0.30% for the day, and seems prepared to rise even more. Against the backdrop of weaker crude oil prices, less than impressive Canadian consumer inflation figures weigh on the commodity-linked Loonie and provide a reasonable lift to the USD/CAD pair. Canadian Consumer Price Index (CPI) data climbed up by 0.5% in January, slightly lower than the 0.6% expected.

Key Movers

EUR/USD remained under modest pressure and traded in negative territory at around the 1.0650 level. The data from the US exhibited business activity that expanded unpredictably earlier this month, letting the US dollar preserve its strength against other pairs. Analysts strongly believe that European Central Bank is considering raising the rates by 50 basis points at the next meeting. GBP/USD appears to be losing its bullish move and has retreated below the 1.2100 level. Stronger-than-expected Purchasing Managers’ Index (PMI) data from the US provided a boost for the USD and forced the pair to retract a portion of its earlier gains. The market is forecasting 25 basis point hikes at the next 2 meetings in March and May by the bank of England. This may take the bank rate peak to 4.5%. UK PMI data showed that business activity in the UK performed stronger than expected with a jump from 48.7 to 53.3. West Texas Intermediate crude oil remained depressed near $76.50 levels as it fades after last Friday’s bounce off a 10-week low.

Expected Ranges

  • EUR/CAD: 1.4332 - 1.4429 ▼
  • GBP/CAD: 1.6179 - 1.6391 ▲
  • AUD/CAD: 0.9241 - 0.9307 ▼
  • USD/CAD: 1.3446 - 1.3527 ▲