USD/CAD: Weak US dollar drives Canadian dollar to a 7-week high


The USD/CAD price falls today as investors respond to Canadian inflation data.
The Headline Consumer Price Index rose 0.5% in September, while the Core Consumer Price Index rose 1%.
Retail sales were up 0.4% in August after rising 0.6% in July.

The USD/CAD price fell 0.30% today as the market reacts to Canadian inflation figures and relatively higher crude oil prices. It is trading at $1.3095, the lowest level since the first week of September.

USD/CAD falls after Canadian inflation figures
Inflation data for Canada

Canada, like all countries, is affected by the Covid 19 pandemic. The disease has infected more than 204,000 people in the country and killed nearly 10,000 of them. In recent weeks, the number of people affected has increased. Yesterday, the country confirmed more than 3,200 people infected and 18 deaths.

As a result, consumer prices have been slow to recover, especially in some sensitive sectors such as hospitality and leisure. According to Statistics Canada, the Consumer Price Index (CPI) fell by 0.1% in September, resulting in an annual increase of 0.5%. In the same month, the Core Consumer Price Index rose by 1.0% on an annualized basis.

According to the Bureau, prices rose in four of the eight sectors covered. Air traffic decreased by 3.2%, while tourism activity remained weak. Prices for passenger cars rose by 2.7%, while prices for clothing and shoes fell by 4.1%. Mortgage prices also rose by 0.1%.

Meanwhile, retail sales improved slightly in August as the economy continued to recover. Sales rose by 0.4% over the month, down 0.6% from July. At the same time, the new property price index rose 1.2%, better than the expected 0.5% increase.

Mixed Canadian economic data

The latest economic figures from Canada were mixed. Earlier this month, the country reported that its exports and imports fell to C$44.93 billion and C$47.38 billion respectively in August. Further data from the Ivey Institute showed that the PMI fell from 67.8 in August to 54.3 in September, indicating that the economic recovery is slowing.

Construction starts were also disappointing, falling from C$261.5 thousand to C$209.0 thousand. On the positive side, however, the labor market continued to improve in September as the economy created more than 378,000 jobs. The unemployment rate fell to 9.0%.

Meanwhile, the USD/CAD price is supported by the low crude oil prices. As a leading oil producer, the Canadian economy tends to be influenced by oil price developments. Today, West Texas Intermediate (WTI) and Brent oil prices are down 1.25% and 1.27% respectively. In the short term, analysts expect prices to come under pressure as the second wave spreads internationally.

Technical outlook USD/CAD
USD/CAD technical table

The USD/CAD price has reached a low of $1.3080. The price is below the 25-day and 50-day exponential moving average, while the RSI is slightly above the over-sold 30 level. It is also on the fifth wave of the Elliot Wave Pattern. This means that the price is likely to continue to fall as the bears begin to target the important support at $1.3050. Start your trading journey with our free Forex trading courses.


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