Bank of Canada’s Kozicki: Energy and gasoline prices were main drivers of CPI inflation in August

Deputy Governor of the Bank of Canada, Sharon Kozicki, speaks and says:

• One of the main drivers of CPI inflation in August was energy and gasoline prices. They can be quite volatile
• It will take a long time to sort through the inflation data, given what’s happening underneath.
• Energy prices themselves, while temporary, are much less important because we are concerned about underlying inflation.

USDCAD fell ahead of CPI, and shortly after today’s CPI data, but then began a rebound higher.

Looking at the 5-minute chart below, this rebound took the price back up to retest its 200-bar moving average on this chart at 1.3446 (see the green line on the chart below). Sellers relied on this moving average during the first test.

It will now be necessary to break below the 50% midpoint of the latest downtrend and the 100-bar moving average of 1.3424 to give sellers more control in the near term. Conversely, a move above the green line at 1.3446 would increase the near-term bullish bias and force traders to target the key 200-day moving average at 1.34621 (see green line on chart below).