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
☰
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
✖

Will USD/CAD break key resistance at 1.35 after soft Canadian CPI?

Article By: ,  Head of Market Research
February 21, 2023 3:21 PM

Key takeaways

  • The CPI in Canada rose by 5.9% YoY in January, compared to a 6.3% increase in December.
  • Prices for cellular services and passenger vehicles contributed to the deceleration in the all-items CPI, while food and mortgage interest cost continued to rise.
  • USD/CAD is ticking up toward key resistance near 1.3500 in the initial reaction to the data.

The just-released Consumer Price Index (CPI) in Canada rose 5.9% year-over-year in January, marking a decrease from the 6.3% increase in December, as per the data released by Statistics Canada.

Canada CPI: The impact of base-year effects

As a reminder, the CPI measures the average change in prices paid by consumers for a basket of goods and services over time. The headline CPI growth rate is calculated as the percentage change between the current month's CPI and the CPI in a base month or the same month of the previous year. “Base-year effects” refer to the impact of price movements from 12 months earlier on the current month's headline CPI.

In the first half of 2022, the global economy was significantly affected by the Russian invasion of Ukraine, leading to a significant increase in prices from January to June 2022. Headline consumer inflation increased from 5.1% in January to 8.1% in June 2022, led by energy products.

This broad increase in prices in the early months of 2022 had a downward impact on the year-over-year rate of consumer inflation in January 2023 since higher prices from January 2022 were used as the basis for year-over-year comparison. Notably, this dynamic will likely continue to drive down Canada’s year-over-year CPI rate further in the coming months.

Canada CPI details

Prices for cellular services fell by 7.9% YoY in January, following a 2.5% increase in December, due to some Boxing Day sales remaining available into January, leading to a decline in prices compared to the same month the previous year.

The price increase for gasoline was the primary contributor to the month-over-month increase in the all-items CPI, rising by 4.7% in January, related to refinery closures in the southwestern United States following winter storm Elliot. On a YoY basis, prices for gasoline rose by 2.9% in January, a slight deceleration from a 3.0% increase in December.

Consumer prices for passenger vehicles rose by 6.2% YoY in January, following a 7.2% increase in December. The price growth slowdown is partly attributable to a base-year effect due to a 0.9% MoM increase in January 2022 when prices were under pressure from supply chain disruptions and higher prices for housing.

Food prices continue to rise YoY, with prices for food purchased from stores up by 6.7% in January, compared to a 6.2% increase in December. Fresh or frozen chicken, beef, and dairy products had the most significant price increases. Restaurant food prices rose by 5.1% YoY in January, led by increases in fast food and take-out prices.

USD/CAD technical analysis

The North American pair has spent most of this year consolidating between about 1.3300 and 1.3500, and after the cooler-than-expected CPI reading, USD/CAD is testing the top of that range again. As the chart below shows, rates are testing their bearish trend line off the October high, as well as horizontal resistance from last month near 1.3500.

With a rate hike from the BOC next month now likely off the table (traders had started to price in an outside chance of another 25bps increase prior to this morning’s data), USD/CAD bulls could look to take the pair through the current resistance level, opening the door for a continuation toward 1.3700 next. However, a failure to break higher despite the current fundamental backing could lead to more consolidation in the well-trodden 1.3250-1.3500 range as we head into March.

Source: StoneX, Tradingview

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter @MWellerFX

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

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. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

© FOREX.COM 2025