News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • US Dollar Outlook: Fed Decision Due - Will it Spark Fireworks? The $DXY edged lower on Tuesday with $EURUSD, $GBPUSD, and $USDJPY all feeling Dollar weakness. Will the Fed catch markets off-guard with another hawkish surprise tomorrow? Link to Analysis - https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2021/07/27/us-dollar-outlook-fed-decision-due-will-it-spark-fireworks.html https://t.co/iTt0jJiuUC
  • Crude oil prices are trading largely unchanged following last week's rebound as the Delta variant of Covid and Chinese regulatory measures temper the near-term demand outlook. Get your market update from @FxWestwater here:https://t.co/T3oQa9qksd https://t.co/qgDReDbtcd
  • USD/JPY price action has weakened sharply on the session but is searching for support. Get your $USDJPY market update from @RichDvorakFX here:https://t.co/s6baPFYuS3 https://t.co/1ze3cKJytb
  • RT @BrendanFaganFx: Nasdaq 100 Outlook: Stocks Decline Despite Stellar Tech Earnings, All Eyes Shift to Fed $AAPL $MSFT $GOOG $QQQ $NDX L…
  • $SPX put in for an impressive midday recovery this past session leaving a large lower wick. The scale of the lower wicks consistently larger than corrections off highs https://t.co/BGkiFUwYsk
  • 🇰🇷 Consumer Confidence (JUL) Actual: 103.2 Previous: 110.3 https://www.dailyfx.com/economic-calendar#2021-07-27
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.53% 🇬🇧GBP: 0.44% 🇨🇭CHF: 0.13% 🇦🇺AUD: -0.32% 🇨🇦CAD: -0.46% 🇳🇿NZD: -0.60% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/foLJDv5tkA
  • US API Stock Changes Crude -4.728M Cushing -0.126M Gasoline -6.226M Distillate -1.882M #OOTT $CL_F
  • RT @Nadex: The Macro Setup is back! Tune in as @GuyAdami, @RiskReversal, and special guest @CVecchioFX discuss: -Stocks lower ahead of big…
  • Heads Up:🇰🇷 Consumer Confidence (JUL) due at 21:00 GMT (15min) Previous: 110.3 https://www.dailyfx.com/economic-calendar#2021-07-27
CAD Risks Further Losses on Disinflation Threat- 1.1200 in View

CAD Risks Further Losses on Disinflation Threat- 1.1200 in View

David Song, Gregory Marks,

- Canada Consumer Price Index to Increase for Third Consecutive Month

- Headline Inflation of 1.3% Would Match the Highest Reading Seen in 2013

Trading the News: Canada Consumer Price Index

A pick up in Canada Consumer Prices may spur a more meaningful correction in the USDCAD as it limits the threat of seeing the Bank of Canada (BoC) implement a rate cut in 2014.

What’s Expected:

Time of release: 02/21/2014 13:30 GMT, 8:30 EST

Primary Pair Impact: USDCAD

Expected: 1.3%

Previous: 1.2%

DailyFX Forecast: 1.2% to 1.3%

Why Is This Event Important:

Despite the recent slowdown in economic activity, Governor Stephen Poloz may retain a rather balanced tone for monetary policy should we see a diminishing risk for disinflation, and the BoC may keep the benchmark interest rate on hold this year as central bank officials see a more robust recovery in the U.S. – Canada’s largest trading partner.

Expectations: Bullish Argument/Scenario

Release

Expected

Actual

New Housing Price Index (MoM) (DEC)

0.1%

0.1%

Industrial Product Price (MoM) (DEC)

0.3%

0.7%

Average Weekly Earnings (YoY) (NOV)

--

2.5%

Rising input costs along with the uptick in wage growth may spark a further rise in consumer prices, and a higher-than-expected inflation print may spur a more meaningful correction in the USDCAD as it limits the BoC’s scope to implement a rate cut in 2014.

Risk: Bearish Argument/Scenario

Release

Expected

Actual

Wholesale Trade Sales (MoM) (DEC)

-0.4%

-1.4%

Existing Home Sales (MoM) (JAN)

--

-3.3%

Manufacturing Sales (MoM) (DEC)

0.0%

-0.9%

However, firms may continue to conduct heavy discounting amid the slowdown in consumption paired with the persistent slack in the real economy, and a dismal CPI print may spur fresh highs in the USDCAD as the BoC shows a greater willingness to revert back to its easing cycle.

How To Trade This Event Risk(Video)

Join DailyFX on Demand to Cover Canada’s Consumer Price Report LIVE

Bullish CAD Trade: Headline Inflation Advances 1.3% or Greater

  • Need red, five-minute candle after the CPI report to consider short USDCAD entry
  • If the market reaction favors a long Canadian dollar trade, establish short with two position
  • Set stop at the near-by swing high/reasonable distance from cost; use at least 1:1 risk-to-reward
  • Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bearish CAD Trade: Canada Consumer Price Report Disappoints

  • Need green, five-minute candle following the release to look at a long USDCAD trade
  • Carry out the same setup as the bearish CAD trade, just in the opposite direction

Potential Price Targets For The Release

USDCAD Daily

Forex_CAD_Risks_Further_Losses_on_Disinflation_Threat-_1.1200_in_View_body_Picture_2.png, CAD Risks Further Losses on Disinflation Threat- 1.1200 in View

Chart - Created Using FXCM Marketscope 2.0

  • Appears to Have Carved Higher Low Ahead of 1.0900
  • Relative Strength Index Breaks Out of Steep Negative Slope
  • Interim Resistance: 1.1172 Pivot to 1.1230 (50.0% expansion)
  • Interim Support: 1.0900 Pivot to 1.0930 (61.8% expansion)

Impact that the Canada Consumer Price report has had on CAD during the last month

Period

Data Released

Survey

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

DEC 2013

01/24/2014 13:30 GMT

-0.1%

-0.2%

-11

-2

December 2013 Canada Consumer Price Index

Forex_CAD_Risks_Further_Losses_on_Disinflation_Threat-_1.1200_in_View_body_Picture_1.png, CAD Risks Further Losses on Disinflation Threat- 1.1200 in View

As was the case during the November print, CPI data out of Canada for the month of December disappointed by a tenth of a percent. Unlike last month where USD/CAD spiked to fresh multi-year highs, price action was missed and the pair ended the day almost flat. It is no surprise that price action slowed after such a large move post-breakout, especially as market participants scaled back positions before the weekly close and FOMC Rate Decision that following Wednesday. As for this print, price action in USD/CAD to the upside over the past 24 hours combined with important time cycles strongly supports a continuation higher if we see weaker than expected CPI figures. On the other hand, a meet or beat of the inflation data could provide for an opportunistic setup to fade Friday lows.

--- Written by David Song, Currency Analyst and Gregory Marks

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

Trade Alongsidethe DailyFX Team on DailyFX on Demand

Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.

New to FX? Watch this Video

Join us to discuss the outlook for the major currencies on the DailyFXForums

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES