Market Data 
- Canadian Dollar holds onto slim gains against softer USD.
- Canada remains data-light this week, US inflation data takes center stage.
- US PPI inflation rises on Tuesday, US CPI inflation due Wednesday.
The Canadian Dollar (CAD) is mixed on Tuesday after broader markets focused on the latest round of inflation figures from the US as investors continue to look for signs of rate cuts from the Federal Reserve (Fed). The CAD held onto recent gains against the Greenback but remains mired in technical consolidation.
Canada saw a slightly better-than-expected decline in MoM Wholesale Sales in March, but strictly low-tier data from Canada this week leaves investors overwhelmingly focused on US inflation data. US Producer Price Index (PPI) inflation for April came in higher than expected MoM. Annualized producer-level inflation arrived as expected but was still higher than before as price growth continues to grip the US economy.
Daily digest market movers: Canadian Dollar holds onto the midrange as inflation dominates
- Canadian Wholesales Sales in March fell -1.1%, less than the expected -1.3% decline but still down from the previous month’s 0.2% (revised from 0.0%). Market impact was muted on the low-tier data release.
- US PPI inflation rose again in April, with MoM PPI growing 0.5% compared to the 0.3% forecast and rebounding from the previous month’s -0.1% decline.
- Core PPI for the year ended in April came in as expected at 2.4%, but still rose from the previous period’s 2.1% (revised from 2.4%).
- US Consumer Price Index (CPI) inflation figures are due on Wednesday, and markets are hoping for an easing in consumer-level inflation. YoY CPI is forecast to tick down to 0.3% from 0.4%, and Core CPI is expected to ease slightly to 3.6% from 3.8%.
- Fed Chair Jerome Powell noted in an appearance on Tuesday that “inflation in Q1 was notable for the lack of further progress.”
- Fed Chair Jerome Powell: Producer Price Index reading was quite mixed
Canadian Dollar PRICE Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -0.25% | 0.13% | -0.10% | -0.22% | -0.35% | -0.18% | |
| EUR | 0.29% | 0.03% | 0.44% | 0.19% | 0.08% | -0.06% | 0.11% | |
| GBP | 0.25% | -0.03% | 0.39% | 0.13% | 0.02% | -0.11% | 0.06% | |
| JPY | -0.13% | -0.44% | -0.39% | -0.23% | -0.36% | -0.50% | -0.31% | |
| CAD | 0.10% | -0.19% | -0.13% | 0.23% | -0.14% | -0.24% | -0.09% | |
| AUD | 0.22% | -0.08% | -0.02% | 0.36% | 0.14% | -0.13% | 0.04% | |
| NZD | 0.35% | 0.06% | 0.11% | 0.50% | 0.24% | 0.13% | 0.17% | |
| CHF | 0.18% | -0.11% | -0.06% | 0.31% | 0.09% | -0.04% | -0.17% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Technical analysis: Canadian Dollar grips near-term gains, but bullish stance weakens
The Canadian Dollar (CAD) is broadly mixed on Tuesday, gaining further ground against the Japanese Yen (JPY) and holding steady against the US Dollar (USD). However, the CAD shed thin weight against the Euro (EUR) and Pound Sterling (GBP).
USD/CAD slid back into a familiar demand zone below 1.3660, but the pair is treading water in the near term. Bids continue to cycle near the 200-hour Exponential Moving Average (EMA) at 1.3691.
Technical support is baked into daily candles at the 50-day EMA near 1.3640, and USD/CAD is still trading north of the 200-day EMA at 1.3546 despite trading on the low side of the last swing high near 1.3850. The pair is up over 3% for 2024.
USD/CAD hourly chart
USD/CAD daily chart
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
