By Ketki Saxena
Investing.com – The Canadian Dollar gained against a basket of major currencies, as a hot domestic CPI print bared back bets of a rate cut from the Bank of Canada in March.
Despite its broad based rally, the loonie gave up further ground vs. the US dollar, remaining near a one month low.
Canadian headline CPI number came in as expected, up 3.4% on an annual basis in November, and compared to November’s 3.1% reading.
However core inflation metrics proved sticky, with both core-trim and core-median inflation readings coming in above expectations. Both readings came in hotter than expected, 3.7% and 3.6% respectively.
Money markets now see a 34% chance that the BoC will start cutting interest rates in March, down from a nearly 50% chance prior to the CPI release, boosting the Canadian dollar.
Despite the loonie’s broad based strength, the loonie continued to weaken vs. the USD, as rising Treasury yields and hawkish commentary from Federal Reserve Governor Christopher Waller, supported the greenback.
Waller noted that despite the progress in tempering inflation, bringing CPI back to its 2% target will not be an easy path, and that he foresees only three rate cuts in 2024.
On a technical level for the pair, analysts at FXStreet note, “Daily candlesticks have the USD/CAD climbing directly into the 200-day SMA, and continued bullish momentum faces a technical quagmire with the 50-day SMA descending into 1.3500 and set for a bearish cross of the long-term moving average.”
“Continued bidding pressure will have the pair set for a fresh challenge of November’s peak near 1.3900, while the technical floor sits at December’s swing low into 1.3200.”