With the value of the Canadian dollar tightly aligned with the price of crude oil, we have seen severe swings in the currency as and when the price of crude oil changes. With the upcoming OPEC meeting, sure to have an impact on the price of oil and thus the CAD, as markets await whether the organization will extend their current supply freeze, traders will be scrambling for reasons to hold the CAD ahead of the key event. Today’s fundamental releases from Canada could do the trick.
First up, we will see the release of the Canadian CPI m/m figure, expected at 0.5%, up from the previous months increase of 0.2%. The CPI measures the change in the price of goods and services from month to month and an increase of this figure represents a heating up of the economy as consumer demand more, pushing prices up. CPI is a major determinant of the overall inflation watched by the Bank of Canada, who look to keep inflation in check with the use of interest rates. A better than expected release will have traders buying the CAD as they price in the improved conditions, while a worse than expected number will have traders selling the CAD.
We also have the release of the Retail Sales m/m figure, expected at 0.4%, will let us know just how well the Canadian economy is doing. The Retail Sales figure measure the change in the total value of the inflation-adjusted sales made at the retail level and is the primary gauge of consumer spending which makes up the majority of economic activity taking place in the Canada. A better than expected release will see the CAD strengthen as markets price in an improving Canadian economy, while a worse than expected number will see the CAD weaken as markets price in a weakening economy.