Event Guide: Canada’s CPI Report (June 2023)

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Canada is printing its June inflation numbers a week after the BOC updated its monetary policies!

How can the CPI release affect the Loonie’s prices?

See if you can get clues from these points:

Event in Focus:

Canada’s Consumer Price Index (CPI) and inflation data for June 2023

When Will it Be Released:

July 18, 2023 (Wednesday), 12:30 pm GMT

Use our Forex Market Hours tool to convert GMT to your local time zone.


  • Headline CPI m/m: expected to remain at 0.4%
  • Headline CPI y/y: 3.1% vs. 3.4% previous

Relevant Data Since Last Event/Data Release:

  • Canada added a net 60K jobs in June (5K forecast; -17.3K previous); unemployment rate ticked higher from 5.2% to 5.4% as more people looked for work
  • Ivey PMI for June: 50.2 vs. 53.5; Employment Index: 57.6 vs. 56.2 previous; Prices Index: 60.6 vs. 60.3
  • In its July statement, BOC shared that the slowdown in inflation has mostly come from easing energy prices rather than lower underlying inflation
  • BOC: “With the large price increases of last year out of the annual data, there will be less near-term downward momentum in CPI inflation

Previous Releases and Risk Environment Influence on CAD

June 27, 2023

Overlay of CAD vs. Major Currencies Chart by TV

Overlay of CAD vs. Major Currencies Chart by TV

Event results / Price Action: Canada’s monthly consumer price hikes slowed down from 0.7% to 0.4% in May, which contributed to the annual CPI plunging from 4.4% to 3.4%.

Not surprisingly, the lower-than-expected CPI numbers decreased the odds of another BOC rate hike.

The Canadian dollar, which was already weakened by overall risk aversion, started an intraweek downtrend that led to CAD closing the week lower against its major counterparts.

Risk environment and intermarket behaviors: Except for pockets of strong data releases, the markets were in an anti-risk mood for most of the week.

It also didn’t help that central banks like the Fed and ECB maintained their hawkish tones and inspired concerns of global growth slowdown.

Safe-havens like the dollar and gold gained ground while crude oil and comdoll prices saw downswings throughout the week.

May 16, 2023

Overlay of CAD vs. Major Currencies Chart by TV

Overlay of CAD vs. Major Currencies Chart by TV

Event results / Price Action: Canada printed stronger than expected inflation data for April, reporting a 0.7% month-over-month increase in headline CPI after the earlier 0.5% gain. This translated to an uptick from 4.3% year-over-year in March to 4.4% in April.

The Loonie was already off to a strong start for the week, as it was buoyed by higher oil prices, and the rally carried on after BOC head Macklem said that it was too early to talk about interest rate cuts.

Risk environment and intermarket behaviors: Fading fears of a global recession also helped lift higher-yielding assets throughout this May trading week, allowing crude oil prices to benefit most from upgraded IEA demand forecasts.

U.S. debt ceiling concerns also eased when House Speaker McCarthy sounded optimistic that a deal could be struck the following week.

Price action probabilities:

Risk sentiment probabilities: Risk-taking has been the name of the game since earlier this week when a slower-than-expected U.S. CPI report inspired “peak interest rate” hopes from the Fed and other major central banks.

That tone may shift a bit ahead of the Canadian CPI release with the latest round of Chinese economic updates (GDP, Industrial Production, and Retail Sales) coming next week on Monday.  This batch of data does tend to have influence on broad risk sentiment, and with recent Chinese PMI data showing slowing conditions, odds are that we’ll see more weakness next week.

Whatever the case may be, broad risk sentiment will likely take their cues from China on  Monday and Tuesday, barring any major surprise headlines.

Canadian dollar scenarios:

Potential Base Scenario: Markets expect Canada’s annual CPI to ease in June but with the exclusion of last year’s “peak” price increases as the base price, we’ll likely see further deceleration in price growth for the month.

And if risk sentiment is leaning negative, a likely scenario if Chinese updates do come in net weaker-than-expected, then the Loonie could see losses after the release, especially against “safe havens” like the Japanese yen and the Swiss franc. Of course, the odds of drawing in sellers likely rise the weaker the actual read is relative to expectations/previous read.

The degree of bearishness may also be dependent on positioning as well as CAD has been a net loser so far in July. Unless we see a major bounce before the CPI release, the downside in Loonie may be limited, with exception to probably the Greenback given the growing bear sentiment on USD at the moment.

Alternative Scenario:

With the Ivey PMI signaling an uptick in prices sentiment and Canada jobs data and surveys showing resiliency, there’s a chance Canadian inflation data comes in above expectations/previous.

This would likely lead to an immediate move higher in CAD against the majors, but will likely be short-lived given expectations of risk sentiment leaning negative.

If sentiment is leaning positive (e.g., China surprises with strong updates), then we could see an extended bounce higher in CAD as this scenario likely draws in some profit takers who’ve been short CAD all July, and possibly some fundie CAD bulls who may play in expectations of hawkish rhetoric coming in from the Bank of Canada down the road.

Watch for long technical setups in CAD against the safe havens in this scenario, especially against USD given the recent bearish shift and the Japanese yen.


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About the Author: Webbey Team

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