By Ketki Saxena
Investing.com – The Canadian dollar was little changed but moderately weaker against its US counterpart today, with both currencies retreating against a basket of currencies.
The US dollar was pressured by an uptick in risk-on sentiment boosted by Chinese GDP data, as the world’s second largest economy expanded 4.5% in Q1 of 2023, beating expectations for 4% growth.
China’s growth - as well as a 10% surge in US retail sales - helped fan optimism about a global recovery, weighing on the safe-haven US dollar.
The Canadian dollar meanwhile was pressured by a sharp decrease in Canadian Consumer Prices. Canadian CPI dropped to 4.3%, falling from 5.2% in February, and a far cry from last summers’ high of over 8%.
Canadian inflation is expected to continue its decline in the coming year, in part due to the “base year” effect, and remains in line with the Bank of Canada’s expectation for inflation to reach 3% by 2024.
Today’s data effectively cements bets that the Bank of Canada will indeed continue with the pause it has maintained at its last two monetary policy meetings - despite commentary from BoC Governor Tiff Macklem today that the BoC is committed to “staying the course and restoring price stability for Canadians”.
On a technical level for the pair, analysts at FX street note, “Both today and yesterday, the price fluctuated above and below the lower 100-hour moving average (currently out 133.763) during multiple hourly bars.. . If the price falls below this moving average going forward, it would signal an increase in bearish sentiment technically.”
“Breaking above the 200-day moving average would still require overcoming the resistance zone between 1.34055 and 1.34104. If the price drops below this level, the targets would be the 50% Fibonacci retracement level at 1.3426 and the declining 200-hour moving average at 1.34339."