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Canada Loses Revenue Due to Lower Export Fuel Prices

8/19/2022 1:36 PM

The USD/CAD pair is correcting upwards, currently trading in the area of 1.2958.

The Canadian currency lost its leading position against the US dollar amid a decline in revenues received by the country from energy exports. According to Statistics Canada, the Commodity Price Index lost 7.4% in July after falling 0.1% in the previous month to 19.1%, down 13.5% year-on-year. Similar dynamics led to inflation adjusting to 7.6% from 8.1%, but food prices, which are the second key component of the indicator, continued to rise, adding 0.9% in July. This movement is clearly seen in the calculation of Core CPI, excluding Food and Energy prices: the figure corrected to 6.6% from 6.5% a month earlier, and is now the main problem for the Bank of Canada.

In turn, the US dollar continues to grow, the day before exceeding 107.000 in the USD Index. The main reason for the positive dynamics was the report on Initial Jobless Claims, which for the first time in a long time showed a decrease in the number of applications to 250.0 thousand after 252.0 thousand recorded a week earlier, while analysts expected an increase in the number of applications to 265.0 thousand.

On the weekly chart of the asset, the price is trading within a wide ascending channel with dynamic boundaries of 1.2600–1.3200, rising again towards the resistance line. The EMA fluctuation range on the Alligator indicator signals a possible growth, and the AO oscillator histogram forms new rising bars, being in the sell zone.

Support levels: 1.2900, 1.2739. | Resistance levels: 1.2985, 1.3133.

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