USDCAD, Daily
Canada CPI slowed to a 1.3% y/y pace in March, leaving a modestly faster growth pace than expected (median +1.2%) following the 1.4% growth rate in February. CPI jumped 0.6% m/m in March after the 0.2% gain in February. The BoC’s core CPI accelerated to a 2.1% y/y pace in March, contrary to projections (median +1.8%) from the 1.9% rate in February. Core CPI shot 0.7% higher on a month comparable basis after the 0.5% gain in February.
The run-up in core CPI puts the measure back above the BoC’s 2.0% midpoint, but the focus at the Bank remains on the growth outlook, which remains subject to downside risk as outlined by Poloz this week and last week. Moreover, the Bank has repeated that temporary factors are behind recent elevated core CPI growth rates, with actual underlying inflation running at around 1.7%. Hence, based on today’s report we should look for steady rates for an extended period of time.
USDCAD continues in the downward sloping trend channel with the nearest support and resistance levels at 1.2561 and 1.2750. The next significant daily support resistance levels can be found at 1.2132 and 1.2917. Continued strength in oil prices keep also pressure on the pair.
Janne Muta
Chief Market Analyst
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