Trade idea: Canadian inflation data tomorrow

On Tuesday, February 20, Canada will unveil the latest inflation data. It is anticipated that headline annual inflation will decrease to 3.2%, marking its first deceleration since October 2023, compared to December's figure of 3.4%. Bear in mind, the Bank of Canada's previously indicated that they expected inflation to persist near 3.5% until mid-2024. The forecasts obviously suggest a slight easing.

Various commercial banks offer a range of forecasts too. ING predicts 3.1%, Wells Fargo anticipates 3.2%, National Bank Financial (NBF) estimates 3.3 to 3.4%, CIBC forecasts 3.3%, and Citi expects 3.4%.

On the chart. the USDCAD faces challenges breaching the 1.3500 resistance line, but it currently hovers just above a supply zone and right on the threshold of its bullish trend line.

The next potential targets are in the range of 1.3530 to 1.3550, with December high at 1.3620, just above this.

It's worth noting that both Canada and the US observe bank holidays on Monday, which could lead to reduced trading volumes.