Talking Points:
- USD/CAD Retains Bearish RSI Momentum Despite Dismal Canada Retail Sales.
- GBP/USD Continues to Carve Lower-Highs Ahead of U.K. CPI, Retail Sales.
- USDOLLAR Correction Remains in Play- Inflation Report in Focus.
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Chart - Created Using FXCM Marketscope 2.0
- Despite the dismal Canada Retail Sales report, USD/CAD may continue to consolidate as the bearish momentum in the Relative Strength Index (RSI) remains intact.
- The stickiness in Canada’s Consumer Price Index (CPI) may keep the Bank of Canada (BoC) on the sidelines; will keep a close eye on the near-term range between 1.2400-1.2800.
- Have been seeing increased volatility in the DailyFX Speculative Sentiment Index (SSI) amid the range-bound price action in USD/CAD as the retail crowd is now let-long on the pair, with the ratio currently holding at +1.17.
GBP/USD
- Ongoing string of closes above 1.4700-10 (78.6% expansion) raises the risk for a larger rebound in GBP/USD as the RSI continues to come off of oversold territory.
- Despite expectations of seeing a rebound in U.K. Retail Sales, a marked slowdown in the U.K.’s Consumer Price Index (CPI) may produce further for the sterling as the disinflationary environment drags on interest rate expectations.
- Still need a close above the 1.5000-15 (50% expansion) to favor a more meaningful correction in GBP/USD.
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11980.76 | 12093.53 | 11975.84 | -0.90 | 145.39% |
Chart - Created Using FXCM Marketscope 2.0
- Ongoing series of lower-highs in the Dow Jones-FXCM U.S. Dollar index raise the risk for a larger correction; will revert back to ‘buying dips’ in the greenback once the RSI breaks out of the bearish momentum.
- Despite expectations of seeing another annualized 0.1% contraction in the U.S. Consumer Price Index (CPI), the core rate of inflation may help to keep the dollar afloat as the figure is projected to climb an annualized 1.7% in February after expanding 1.6% the month prior.
- Will continue to watch the low following the Federal Open Market Committee (FOMC) interest rate decision, but need a close below 11,894 (61.8% retracement) to 11,901 (78.6% expansion) to favor a more meaningful decline in the USDOLLAR.
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| Release | GMT | Expected | Actual |
|---|---|---|---|
| Initial Jobless Claims (MAR 14) | 12:30 | 293K | 291K |
| Continuing Claims (MAR 7) | 12:30 | 2400K | 2417K |
| Philadelphia Fed Business Optimism Survey (MAR) | 14:00 | 7.0 | 5.0 |
| Leading Index (FEB) | 14:00 | 0.2% | 0.2% |
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--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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