USD/CAD pulls back from 1.3500 following mixed Canadian inflation data
- The Canadian Dollar picks up following mixed inflation figures in Canada.
- Weak US manufacturing data has increased negative pressure on the Dollar.
- USD/CAD remains trending higher, with 1.3420 and 1.3350 likely to hold bears.
Consumer prices eased in Canada in December, according to data by Canada Statistics, although the headline rate accelerated from November. In the US, a NY Fed manufacturing gauge revealed a sharp deterioration in the sector, adding negative pressure to the US Dollar.
Canadian CPI declined 0.3% in December, as expected, while the yearly rate grew at a 3.4% pace, up from 3.1% in the previous month. The BoC Core CPI, however, shows a different picture with the monthly rate 0.5% lower and the yearly inflation declining to 2.6% from the previous 2.8%.
US manufacturing activity data disappoints
At the same time, the New York Fed Empire State Index has dropped to -43.7 in January from -14.5 in December, against expectations of a -5 reading. These figures are sending a negative picture of factory activity and eroding speculative demand for the USD.
The USD/CAD has posted a knee-jerk reaction at 1.3500 intra-day highs, retreating to the mid-range of 1.3400 at the moment of writing.
The pair, however, maintains the broader positive trend, with support levels are 1.3420 and 1.3350 likely to provide significant support ahead of Fed Waller’s speech.
On the upside, immediate resistance is at 1.3500, with the next target at 1.3545.
Technical levels to watch