Open an Account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts 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.
Open an Account
✖

“As expected” Canadian CPI data disappoints USD/CAD traders

November 17, 2021 11:08 AM

As traders already know, inflation has been running hot these last few months!  Recent inflation data from the US and the UK both beat already high expectations.  The Canadian October CPI headline print was hot as well, at 4.7% YoY vs 4.4% YoY in September.  This was the highest reading since February 2003!  In addition, the Core CPI YoY for October was 3.8% vs 3.7% in September, the highest level in 30 years!  As a result, one would expect USD/CAD to be tanking, as stronger inflation in Canada should lead to a stronger Canadian Dollar, especially with the BOC ending their bond buying program at their last meeting.  However, expectations were for the headline CPI to be 4.7% and the Core CPI to be 3.8%, therefore there was no “beat” of expectations as in the US and UK.  As a result, the Canadian Dollar actually sold off vs the US Dollar on the release of the data.

 

Trade USD/CAD now:  Login or open a new account!

 

On a 15-minute chart, USD/CAD immediately moved higher on the release of the data.  Price moved from 1.2549 to 1.2595 within a few minutes, a move to 46 pips!

Source: Tradingview, Stone X

USD/CAD had already been moving higher since price pulled back to the to 1.2288 in late October as Crude Oil (orange line) was making new highs near $85.  The pair paused near the 200 Day Moving Average and horizontal resistance between 1.2530 and 1.2599, respectively.  However yesterday, USD/CAD formed a bullish engulfing candlestick on the daily timeframe, indicating higher prices could be ahead.

Source: Tradingview, Stone X

On a 240-minute timeframe, not only was there horizontal resistance at the recent highs, but it was also the 61.8% Fibonacci retracement from the highs on September 29th to the lows on October 21st, near 1.2589.  Notice too, that on October 21st price broke higher out of a descending wedge. The target for a descending wedge is a 100% retracement. In this case the target is 1.2775.  If price closes above 1.2604 on a daily timeframe, there is little standing in the way from price moving to the target.  However, the first target should be 1.2715, which is the target for the AB=CD pattern.

Source: Tradingview, Stone X

If price holds the 1.2604 level (negating the bullish engulfing candle) and breaks below 1.2492, it will have formed a double top on a short-term timeframe. The target would be near 1.2380.    Horizontal support ahead of the target is 1.24324.  Below there, price can retrace to the October 21st lows at 1.2288.

Higher CPI from Canada may result in an increase in interest rates sooner than expected, as Canada has already ended it bond buying program.  However, “as expected” CPI from Canada resulted in a selloff in the Loonie today, as traders were hoping for more!

Learn more about forex trading opportunities.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.

© FOREX.COM 2025