Canadian CPI On Watch Today

CAD Inflation on WatchCanadian CPI will be on watch today. Following the bank’s latest hike this month, the market has become more uncertain over its BOC expectations. With two consecutive hikes in June and July, putting an end to the neutral streak which ran from January, the market is geared towards expecting more hikes near-term. At the latest meeting this month, the BOC cited concerns over the inflation outlook as the main driver behind its decision to tighten further. With this in mind the risks today are evenly split around inflation. If we see any stickiness at prior levels, this will likely see CAD well bid with the market expecting a further BOC hike in August. On the other hand, if inflation is seen falling further, this should see CAD lower on reduced near-term tightening expectations.Today’s CPI ForecastsIn terms of the forecasts for today, the market is looking for month on month headline CPI to cool to 0.3% from 0.4% prior. Year on Year, median CPI is expected to cool to 3.7% from 3.9% while Trimmed CPI is expected to cool to 3.6% from 3.8%. Given the bank’s concern over inflation, it would likely take a firm downside surprise today to push back against further tightening expectations.Technical ViewsUSDCADThe break below the 1.3280 level is a key bearish development for the Loonie. While price holds below this level, the focus is on a further fall lower in line with bearish momentum studies readings  with 1.2926 the next downside target to note. To the topside, if bulls can get back above 1.3280, 1.3501 will be the next level to note.