Canada August CPI 2.0% vs 2.1% expected

• Prior month 2.5%(it came in as expected)
• CPI MoM -0.2% vs 0.0% expected.
• Prior MoM +0.4%

Core measures:

• CPI Bank of Canada core YoY 1.5% vs 1.7% last month
• CPI Bank of Canada core MoM -0.1% versus +0.3% last month
• Core CPI MoM SA 0.1% versus 0.1% last month
• Median 2.3% versus 2.2% estimate. Last month 2.4%
• Trim 2.4% versus 2.5% estimate. Last month .7%
• Common 2.0% versus 2.2% last month

The initial reaction is a run to the upside for the USDCAD. The USDCAD went from 1.3590 to the current rate of 1.3610. There is resistance near a swing area between 1.3615 1.3622. The 200 bar moving average on a four hour chart is just above that at 1.3624 in the 38.2% retracement of the move down from the August high is at 1.3633. The price needs to get above all those measures to increase the bullish bias from a technical perspective.

With retail sales in the US at least with the headline moving higher than expected, it puts into question the basis points or 25 basis points at the Fed meeting tomorrow (should be positive for the USD). For the Bank of Canada, inflation is coming down while unemployment is going higher (6.6% unemployment rate was the highest ex the Covid period, since 2017)

This article was written by Greg Michalowski at www.forexlive.com.