USD/CAD has more room to extend than any other major pair after Monday's session left it well short of its average daily range. Canada's August CPI matched forecasts at 3.0% year on year, but a weaker-than-expected monthly print has pared back bets on an October Bank of Canada rate hike.
The US dollar opened the week higher against every major currency, gaining 0.13% against the Canadian dollar even as it rose as much as 0.69% against the New Zealand dollar. The greenback drew support from safe-haven demand, rising oil prices and expectations that the Federal Reserve will raise its target rate this week.
USD/CAD has the most room to roam
Despite the modest gain, USD/CAD's daily range told a different story. The pair moved only 37 pips against a 62-pip average true range, completing roughly 60% of its typical daily move.
That left it with the widest gap to its average range among the major pairs, ahead of USD/CHF at about 74%. EUR/USD, USD/JPY and NZD/USD had already exceeded their average ranges by the same point in the session.
Canadian CPI holds at 3.0% as core measures stay contained
Statistics Canada's August report showed headline inflation unchanged at 3.0% year on year, matching both July's reading and forecasts. On a monthly basis, however, CPI fell 0.1%, undershooting the 0.0% consensus after a 0.5% rise the previous month.
The details were mixed. Gasoline inflation slowed from 25.7% to 22.8%, yet inflation excluding gasoline accelerated from 2.2% to 2.4% and rent inflation rose from 2.5% to 2.8%. The Bank of Canada's core gauges stayed contained: the median measure held at 2.0% and the trimmed measure at 1.9%, while the common measure eased from 2.7% to 2.6%.
The Canadian dollar dropped on the release as traders trimmed bets on an October Bank of Canada hike, with pricing nudging lower from 58% ahead of the report. The reaction adds to a week already centered on central-bank decisions, with the Federal Reserve announcing its rate decision Wednesday and the Bank of England and Bank of Japan following Thursday.
Sources: Investinglive, Investinglive, ActionForex
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