The USD/CAD price is hovering near its lowest level since June as investors wait for the latest Canadian consumer inflation data. The pair is trading at 1.2345, which is about 4.60% below the highest level in September.
Canada inflation data
The USD/CAD price has been in a bearish trend recently as the market reflects on the strong Canadian economic recovery. Data published this month showed that the country’s economy added thousands of jobs in September while the unemployment rate declined.
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On Wednesday, the Canadian statistics agency will publish the latest consumer inflation data. Analysts expect that the country’s inflation numbers held steady in September. Besides, the cost of energy in the country has jumped while the supply chain challenges have remained.
Therefore, data compiled by Reuters show that most analysts expect that the overall inflation rose by 4.3% in September. This will be a slight increase from the previous month’s increase of 4.1%. It will also be above the Bank of Canada (BOC) estimate of 2.0%.
As such, the USD/CAD pair has declined because analysts expect that the central bank will continue its tightening cycle. It has already tapered asset purchases, meaning that it could soon start hiking interest rates.
The pair has also declined because of the performance of the energy market. In the past few weeks, the price of crude oil has surged to the highest level in more than 7 years. Brent has risen to $84 while West Texas Intermediate (WTI) has also risen to more than $80. Canadian oil prices have also risen.
The performance of crude oil is important because of the volume of oil that Canada pumps every day. It sells millions of barrels per day because it is the fourth-biggest producer in the world.
The daily chart shows that the USD/CAD pair formed a triple-top pattern a few weeks ago. The neckline of this pattern was at 1.2417. On the daily chart, the pair has moved below the 25-day and 50-day moving averages while the MACD has declined below the neutral level.
Therefore, the pair will likely continue falling in the near term as investors target the next key support level at 1.2200.
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