- The dollar weakens in general after the US data.
- The Loonie among the most alert currencies after the Canadian inflation figures.
- USD/CAD modestly below 1.3400, with no clear direction.
The pair USD/CAD is nearing 1.3400, while the dollar pared some of its recent losses that followed the release of US economic data. The pair remains around daily highs despite the dollar’s slide supported by Canadian data.
Loonie weakens after Canadian data
Canadian inflation figures came in below expectations on Wednesday. The Industrial Products Price Index (IPPI) fell 1.1% month-on-month, below the market consensus 0.3% drop. Compared to a year ago, it was up 7.6%. The Commodity Price Index (IPMP) fell 3.1% in December, against expectations of a 1.3% drop.
“These declines were partly influenced by lower crude oil prices, which fell partly on macroeconomic concerns, as well as global production slightly above demand. Diesel prices remained relatively higher than those of gasoline, due in part to the effects of the Russian invasion of Ukraine. Russia was a major supplier of diesel to Europe, which increased its imports from other sources,” Statistics Canada said in its report.
The Loonie weakened after the figures. USD/CAD held around 1.3375 after the figures, even amid a dollar slide after the US data. In the US, the Producer Price Index declined 0.5% in December, versus market consensus for a 0.1% drop; and the annual rate fell to 6.2%, the lowest since March 2021. Another report showed that Retail Sales fell 1.1% in December, more than the expected 0.8% decline. Industrial Production contracted 0.7% in December.
US bond yields fell after the figures, hitting fresh multi-day lows across the curve. The DXY fell below 101.80, its lowest level since May.
Despite the weakness of the dollar, the USD/CAD pair remains close to 1.3400, with no clear direction. To the upside, the pair faces initial resistance at 1.3410 and then 1.3445/50. A consolidation above 1.3450 would open the doors to further gains. On the opposite side, support is at 1.3365 followed by 1.3350 (daily low).
From a broader perspective, risks are to the downside in USD/CAD. Losses look limited as long as it holds above 1.3350 at close.
technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
