The Canadian dollar cooled slightly and gave back some of its recent gains against the US Dollar, as well as most major currencies, on Monday. This shift occurred as investors consolidated their positions ahead of the final 2023 Canadian Consumer Price Index (CPI) announcement, expected to be released by Statistics Canada on Tuesday.
The Canadian CPI number is anticipated to further decelerate on a year-over-year basis, dropping from 3.1% to 2.9%. Such a decrease would mark another significant milestone for the Bank of Canada, potentially setting the stage for a focus shift towards rate cuts. However, a higher-than-expected CPI could trigger the Canadian dollar to weaken against the US dollar, potentially returning to the 1.36 range. All economic indicators will be closely monitored from this point forward to gauge their potential impact on the interest rate differential between the Bank of Canada and the Federal Reserve in 2024. The Bank of Canada’s next scheduled interest rate announcement is set for January 24th, 2024.
The USD/CAD pair has now declined (signifying a rise in CAD/USD) by close to 3%, clearly breaking out of the 1.35 to 1.36 range in which it had been trading for a considerable period. The Canadian dollar reached a multi-month high on Friday, hitting 1.3390. According to technical analysis, the next support level for USD/CAD is anticipated to be in the 1.31 range.
The Canadian dollar is currently trading at 1.3401 CAD against the US Dollar.
