Will Canada In April inflation figures start to reflect the impact of American prices?

• Canadian inflation should have lost momentum in April.
• The consumer price index is considered to increase by 1.6% compared to the previous year.
• The Canadian dollar seems to have moved into a consolidating phase.

All eyes will be on Statistics Canada this Tuesday because it closely publishes the April consumer price index (ICC), a key inflation gauge that the Banque du Canada (BOC) follows closely when setting interest rates.

The inflation of the securities should have attenuated, the annual forecast of the IPC falling by 1.6% against 2.3% in March. On a monthly basis, however, inflation should have increased slightly, increasing 0.5% compared to the previous increase by 0.3%.

The Bank of Canada will also publish its privileged basic inflation measures, which aim to eliminate volatile price oscillations for a clearer vision of underlying trends. In March, the basic ICC CPI increased 2.2% compared to the previous year.

Although recent inflation data suggest that prices are moderate, the markets should carefully work. The figures do not yet reflect the full impact of American commercial prices recently imposed under the Trump administration – an element that could complicate inflation prospects in the coming months. Consequently, a cautious tone is likely to prevail among investors and political decision -makers.

What can we expect from Canada's inflation rate?

The BOC held its reference interest rate at 2.75% last month, stopping after seven consecutive cuts and citing mounting uncertainty surrounding American trade policy as a key reason to retain its usual economic forecasts.

Officials said that the unpredictability of the United States prices imposed by the United States and the potential of a broader world trade conflict have made it impossible to provide a reliable perspective. Instead of its regular quarterly projections, the bank has published two hypothetical scenarios to illustrate possible results:

In the more optimistic scenario, most prices are finally canceled by negotiation. The bank said it would probably lead to a temporary slowdown in Canadian and global growth, with inflation plunging to 1.5% for a year before returning to the target of 2%.

A more serious scenario plans an extended world trade war. In this case, Canada would enter a profound recession, and inflation would go beyond 3% by mid-2026 before gradually going back to the target levels. The bank recognized that other results were possible, emphasizing the high degree of economic uncertainty.

In its annual financial stability report (FSR), the Central Bank has recognized that the system remains resounding for the moment, but it has also pointed out increasing vulnerabilities if trade tensions come on.

The officials underlined the prices imposed by US President Donald Trump on Canadian goods and Ottawa reprisal measures as potential threats. They said that even if the financial sector is currently resistant, the current pricing battles could possibly harm banks and financial institutions by making households and companies to manage their debt.

The BOC noted that, in the short term, the unpredictability of American trade policy could trigger greater volatility on the market and deformation liquidity. In more extreme cases, this type of turbulence could degenerate into broader market dysfunction.

In the long term, said the bank, a full -fledged world trade war could have serious economic consequences.

When the CPI data from Canada is due and how could it affect USD / CAD?

Data on inflation in April in Canada is due to be released on Tuesday at 12:30 p.m. GMT, and the markets are preparing for a mixed image. Although there is a general feeling that prices can have released somewhat, the details could go in both directions.

If inflation is warmer than expected, it could encourage the boc to take a more bellicist position, which could give a boost to the Canadian dollar. On the other hand, the milder numbers would probably reinforce expectations for more rate drops, putting some pressure on the Huard.

That said, a good leap in inflation is not necessarily good news either. This could increase red flags on the health of the Canadian economy, and ironically, this kind of surprise could also weigh on money. In short, the markets look closely – not only for the title number, but for the broader message it sends to the place where politics and growth are heading.

The main analyst Pablo Piovano of FxStreet stressed that the USD / CAD had increased to a consolidating range just below its simple average of 200 days (SMA) at 1,4012.

“If the Canadian dollar manages to erase its 200 -day SMA, short -term prospects should switch to a 55 -day SMA to 1,4098, which should offer an interim resistance before the April summit of 1.4414, established on April 1, with another March barrier of 1.4542. 1.4792, published on February 3, back in sight, “he added.

The resurgence of the lower tone could motivate the USD / CAD to embark on a potential visit on its floor in 2025 to 1.3838, marked on April 11, “said Piovano.” It would be followed by the bottom of November 2024 to 1.3817, with the following key support seen in September 2024 of 1.3418. »»

From a technical point of view, Piovano reported that the USD / CAD is currently pointing out a mood as a function of the relative force index (RSI) around the threshold of 50. He added that the average directional index (ADX) is around 24 points to a loss of momentum from the current trend.