When is the Canadian consumer inflation (CPI report) and how could it affect USD/CAD?

Canada CPI Overview

Statistics Canada will release the consumer inflation figures for November later during the early North American session on Wednesday, at 13:30 GMT. The headline CPI is expected to remain flat during the reported month as compared to the 0.7% increase in October.  Furthermore, the yearly rate is expected to ease to 6.7% in November from the 6.9% previous. More importantly, the Bank of Canada's Core CPI, which excludes volatile food and energy prices, is estimated to come in flat for November, though rise to 6.4% on a yearly basis from 5.8% in October.

Analysts at Wells Fargo offer a brief preview of the key macro data and write: “The CPI rose at 6.9% YoY in October, and taking a closer look at the details, price gains for gasoline and mortgage interest costs were offset by softer food inflation. Commodity prices have come down from their peak, which may provide some relief on the headline inflation front. In November, we expect CPI inflation trended lower to 6.4% YoY.”

How Could it Affect USD/CAD?

Ahead of the release, the USD/CAD pair gains some positive traction and holds steady above the 1.3600 mark amid the emergence of some US Dollar buying. That said, a mildly bullish tone around crude oil prices underpins the commodity-linked Loonie and acts as a headwind for the major. A stronger Canadian CPI print will be enough to provide a fresh lift to the domestic currency and attract fresh sellers around the pair. Conversely, a softer-than-expected report should allow the pair to capitalize on its intraday uptick and aim back to conquer the 1.3700 round-figure mark.

Key Notes

  •   Canadian CPI Preview: Forecast from five major banks, inflation to cool

  •   USD/CAD Outlook: Ascending trend-line could protect the downside ahead of Canadian CPI

  •   USD/CAD holds steady above 1.3600 ahead of Canadian CPI, US Consumer Confidence Index

About Canadian CPI

The Consumer Price Index (CPI) released by Statistics Canada is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of CAD is dragged down by inflation. The Bank of Canada aims at an inflation range (1%-3%). Generally speaking, a high reading is seen as anticipatory of a rate hike and is positive (or bullish) for the CAD.