The USD/CAD exchange rate has held steady in the past few weeks as market participants react to the US and Canada trade war and the actions of the respective central banks. Here are the top three catalysts for the USD to CAD exchange rate this week.
Canada consumer inflation data
The first main catalyst for the USD/CAD pair will come out on Tuesday when Canada publishes the latest consumer inflation data, which will have an impact on the Bank of Canada (BoC) decision.
Economists polled by Reuters expect the data to show that the headline consumer price index (CPI) dropped from 1.9% in June to 1.7% in July, moving further below the Bank of Canada (BoC) target of 2.0%. The monthly inflation is expected to move from 0.1% to 0.3%.
Core inflation, which excludes the volatile food and energy products, is expected to move from 0.1% to 0.4% on a MoM basis, and remain unchanged at 3.1% on an annual basis.
These numbers will mean that the recent Bank of Canada (BoC) cuts have not stimulated the country’s inflation. The bank has been one of the most dovish in the current cycle, moving the headline rate from 5.5% to the current rate of 2.75%.
The central bank left rates unchanged in the last monetary policy meeting, and analysts expect it to deliver two more cuts this year. It is concerned about the state of the economy because of Donald Trump’s tariffs.
Trump imposed a 35% tariff on most non-USMCA goods, up from 25% earlier this year. He also added a 50% tariff on steel and aluminium and a 25% on vehicle and parts.
The US also added tariffs on products like lumber, copper, and petroleum products.
Canada will also publish the latest retail sales numbers on Friday. These numbers will provide more information on the state of the economy.
FOMC minutes and Jackson Hole Symposium
The USD/CAD pair is expected to react to the upcoming Federal Reserve minutes and the Jackson Hole Symposium. These minutes, which will come out on Wednesday, will provide more information on what happened in the last meeting.
The bank left interest rates unchanged between 4.25% and 4.50%, with two officials voting for a cut. This was the first time in many years that the meeting was not unanimous.
The other key USD/CAD news will come out on Friday when Jerome Powell will address participants in the Jackson Hole Symposium in Wyoming. This meeting normally sets the tone for what to expect in the next meeting in September.
USD/CAD technical analysis
The daily chart shows that the USD/CAD pair formed a triple-bottom pattern at 1.3543, its lowest level in June, July, and August. It is now hovering slightly above the neckline of this pattern.
The pair has moved above the 50-day Exponential Moving Average (EMA) and is about to cross the 100-day one. Therefore, the pair will likely surge as bulls target the resistance point at 1.400.
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