1. Home
  2. Live Market Analysis
  3. USDCAD - Canada Prepares for Inflation
USDCAD - Canada Prepares for Inflation

The USD/CAD pair has been unique when compared to other major currency pairs. The price has not moved in favor of a longer term US Dollar trend over the past 3 months as we’ve seen with the Euro, Pound and Yen. Instead, the exchange rate has been in a constant clash with price gains from one currency, being followed by a correction.

Overall, the US Dollar has seen most of the gains but the Canadian Dollar has performed better than its counterparts. Over the past 14 days, the USD/CAD price has increased by almost 3.5% and over 400 PIPs. However, the exchange rate has remained within the larger price range for now.

The US Dollar had gained momentum against the Canadian Dollar partially due to the hawkish alterations put in place by the Federal Reserve, but also due to the declining performance of the Canadian economy. According to experts, Canada is running a higher risk of witnessing a recession - something which can also be seen in its economic releases from last week.

Towards the end of last week, the Canadian Real Estate Association (CREA) noted that the number of homes sold fell by 20% in May compared to the same period in 2021. The House Price Index lost 0.8% in a month after falling 1.1% in April, but it is still more than 19% higher than last year, mainly due to the impressive growth seen at the end of 2021. The association also noted that the country was more strongly affected by COVID-19 as it took stricter measures than their partners in the US.

Today, market participants are anticipating the release of the monthly retail sales figures and the latest Consumer Price Index. The CPI figure is predicted to increase by 1% compared to 0.6% the previous month. Traders appear to be keen to see if the number of sales remains high with the inflation level increasing above 7%, or if higher prices have indeed affected consumer appetite.

In addition to the economic releases for Canada, the market will also be closely watching the Fed’s testimony in the US, scheduled for Wednesday and Thursday. It is predicted that the Chairman will almost certainly comment on the level of inflation and future interest rate hikes. So far, Mr. Powell has advised that a 50 or 75 basis point increase is on the table.

Even though the price movement has strongly been in favor of the US Dollar, the asset has declined this morning by 0.45%. Currently, the decline is merely forming a retracement in the longer-term bullish trend, however, traders will be monitoring the price movement closely over the next 2 days with the new releases.

USDCAD - 20.06.2022.jpg

It should also be noted that the retracement in the US Dollar can be seen in all major pairs this morning and the US Dollar Index has declined to 104.39. The Canadian Dollar on the other hand is witnessing mixed movements depending on the pair.

IMPORTANT NOTICE: Any news, opinions, research, analyses, prices or other information contained in this article are provided as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and therefore, it is not subject to any prohibition on dealing ahead of dissemination. Past performance is not an indication of possible future performance. Any action you take upon the information in this article is strictly at your own risk, and we will not be liable for any losses and damages in connection with the use of this article.
RISK WARNING: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail client investors lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Copyright © 2022 – All rights reserved.

NAGA is a trademark of The NAGA Group AG, a German based FinTech company publicly listed on the Frankfurt Stock Exchange | WKN: A161NR | ISIN: DE000A161NR7.

Any trademarks appearing on this website are the property of their respective owners.

The NAGA Group AG is the holding company of various companies, such as NAGA GLOBAL LLC, NAGA MARKETS EUROPE LTD, NAGA Technology GmbH, NAGA Pay GmbH and has a close link with NAGAX Europe OÜ.

RISK WARNING: Derivatives are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail investor accounts lose money when trading derivatives with this provider. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money.

Trading with NAGA Trader by following and/or copying or replicating the trades of other traders involves high levels of risks, even when following and/or copying or replicating the top-performing traders. Such risks include the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Before making an investment decision, you should rely on your own assessment of the person making the trading decisions and the terms of all the legal documentation.

Restricted countries: NAGA Group AG does not provide services for the residents of certain countries, such as Afghanistan, Albania, American Samoa, Australia, Barbados, Belgium, British Virgin Islands, Burkina Faso, Cambodia, Canada (including Quebec), Cayman Islands, Central African Republic, Congo, Democratic People's Republic of Korea, Democratic Republic of the Congo, Gibraltar, Guam, Haiti, Iran, Iraq, Isle of Man, Israel, Jamaica, Jordan, Libyan Arab Jamahiriya, Mali, Monaco, Morocco, Myanmar, Nicaragua, Philippines, Russian Federation, San Marino, Senegal, Serbia, Somalia, South Sudan, Sri Lanka, Syrian Arab Republic, Trinidad and Tobago, Tunisia, Turkey, Uganda, Ukraine, United Kingdom, US Minor Islands, US Virgin Islands, USA, Vanuatu, Yemen, Zimbabwe.

Member of NAGA Group AG that is publicly listed in Frankfurt Stock Exchange.
close icon
By using this website, you agree to our cookie policy