Technical Bias: Slightly Bullish
- USDCAD trading at daily highs in New York session, advancing 0.5% to 1.2270.
- US CPI rate declines 0.2% YoY in April; core CPI up 1.8% YoY.
- Canada CPI rate rises 0.8% YoY in April; core CPI up 2.3% YoY.
The USDCAD climbed above 1.22 on Friday morning, as declining energy prices weighed on consumer prices in both Canada and the United States.
The USDCAD was trading at daily highs in the New York session, climbing 0.5 percent to 1.2270. The pair has gained 2 percent over the past five days as the US dollar rebounded from last week’s lows. The USDCAD faces initial support at 1.2171, the low from May 22. On the upside, the next resistance test is 1.2287, the high from April 22.
Hourly price action supports a slight bullish bias for the USDCAD, but the outlook is neutral on the daily chart.
Us Inflation Softens in April
US CPI declined for a second consecutive month in April on weak gasoline prices, but rising medical and shelter costs suggested that underlying inflation was improving.
The core CPI rate was -0.2 percent in the 12 months through April, the Labor Department reported on Friday. That was the largest annual drop since October 2009. Compared to March, the consumer price index rose 0.1 percent.
So-called core CPI, which strips away volatile goods such as food and energy, increased 0.3 percent from March, its largest monthly gain since January 2013.
Friday’s figures suggest the Federal Reserve is still on course to begin lifting interest rates this year, despite ruling out June as a possible date to begin normalizing monetary policy. The Fed’s next policy meetings are scheduled for June 16-17 in Washington.
Canada Inflation Softens
Consumer prices softened in Canada, with annual inflation rising at its slowest rate since October 2013.
The consumer price index increased 0.8 percent annually in April, following a 1.2 percent increase in March, Statistics Canada reported from Ottawa.
Like the United States, Canada saw energy prices tumble last month. Energy prices plunged 13.5 percent in the 12 months through April, following a 10.4 percent drop in March. Excluding energy, the CPI rate increased 2.2 percent year-on-year. Core inflation increased 2.3 percent, official data showed.
Bank of Canada Governor Stephen Poloz said earlier this week that the economy will remain below capacity until the end of 2016.