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.

Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Bearish
Bitcoin
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • US Equity Index Update (Tuesday Close): $DJI +0.00% $SPX +0.16% $NDX +0.27% $RTY +0.09% $VIX -0.08%
  • Indices Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.01% US 500: 0.01% Germany 30: -0.13% France 40: -0.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/kiOU1azgBo
  • RT @PeterMehlos: @JStanleyFX Nobody thoroughly covers more markets & various financial vehicles in an hour than @JStanleyFX. Once again sha…
  • $SPX sits slightly above it's opening level going into the final minutes of the trading day https://t.co/qp73niLrDA
  • RT @LiveSquawk: Trump Advisers Exploring Income-Tax Proposal To Cut Middle-Class Rate To 15% - WP https://t.co/KvqRauKmyf
  • US Dollar Resistance Test: Trade or Fade USD, EUR/USD, AUD/USD https://www.dailyfx.com/forex/fundamental/article/drivers_of_price_action/2019/11/12/us-dollar-resistance-test-usd-trade-or-fade-eurusd-audusd-js55.html
  • White House Advisor Kudlow: - New tax plan will not be released for a few months $SPX
  • $USDCNH surging to session highs following Trump's speech earlier today at NY Eco Club and latest remarks from Kudlow on CNBC stating there will be no tariff adjustment until China deal finalized, though possible tariff rollback would be part of phase one https://t.co/7eRGag1nH6
  • White House Advisor Kudlow: - Trump asked that we look at a tax cut 2.0 $SPX
  • Canadian #Dollar Outlook: $USDCAD Breakout Fizzles- #Loonie Levels - https://t.co/ol2eOI2y6i https://t.co/a8KNyMKy4I
Bearish USD/CAD Break in Focus- Canada CPI to Trigger Fresh Lows?

Bearish USD/CAD Break in Focus- Canada CPI to Trigger Fresh Lows?

2014-06-20 07:00:00
David Song, Currency Strategist
Share:

- Canada Consumer Price Index to Hold Steady at 2.0% for Second Straight Month.

- Core Rate of Inflation to Increase 1.5%- Fastest Pace of growth Since August 2012.

Trading the News: Canada Consumer Price Index

Despite expectations of seeing a 0.6% rebound in Canada Retail Sales, the Consumer Price Index (CPI) may play a greater role in driving the USD/CAD as the Bank of Canada (BoC) retains a rather dovish tone for monetary policy.

What’s Expected:

USD/CAD CPI

Why Is This Event Important:

A further pickup in core price growth may encourage the BoC to adopt a more hawkish tone for monetary policy, and we may see Governor Stephen Poloz continue to talk down bets for a rate cut should the data print curb the threat for disinflation.

For LIVE SSI Updates Ahead of Canada’s CPI Print, Join DailyFX on Demand

Expectations: Bullish Argument/Scenario

Release

Expected

Actual

Existing Home Sales (MoM) (MAY)

--

5.9%

Net Change in Employment (MAY)

25.0K

25.8K

Average Weekly Earnings (YoY) (MAR)

--

3.1%

The pickup in wage growth paired with the ongoing recovery in private sector activity may limit the downside risk for inflation, and a strong CPI print may generate fresh monthly lows in the USD/CAD as market participants scale back bets of seeing lower borrowing costs in Canada.

Risk: Bearish Argument/Scenario

Release

Expected

Actual

Ivey Purchasing Manager Index s.a. (MAY)

56.0

48.2

Gross Domestic Product (Annualized) (1Q)

1.8%

1.2%

Retail Sales (MoM) (MAR)

0.3%

-0.1%

However, firms may offer discounted prices amid the slowdown in economic activity along with the downturn in private sector spending, and a weaker-than-expected inflation print may spur a near-term correction in the USD/CAD as it raises the risk for a rate cut.

How To Trade This Event Risk(Video)

Bullish CAD Trade: Core Inflation Rises 1.5% or Greater

  • Need red, five-minute candle following the CPI report to consider short USD/CAD entry
  • If the market reaction favors a bullish 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 Price Growth Disappoints

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

Potential Price Targets For The Release

USD/CAD Daily

Bearish USD/CAD Break in Focus- Canada CPI to Trigger Fresh Lows?

Chart - Created Using FXCM Marketscope 2.0

  • Fails to Retain Series of Higher-Highs/Lows; Bearish RSI Break Favors Downside Target
  • Interim Resistance: 1.1000 (1.618% expansion) to 1.1020 (23.6% retracement)
  • Interim Support: 1.0710 (100.0% expansion) to 1.07309

Read More:

Bearish USD Setup Continues to Take Shape- AUD/JPY Range in Focus

USD/CAD Technical Analysis – Support Above 1.08 in Focus

Impact that the Canada CPI 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)

APR

2014

05/23/2014 12:30 GMT

2.0%

2.0%

-15

-27

April 2014 Canada Consumer Price Index (CPI)

USD/CAD Chart

The headline reading for Canada inflation climbed an annualized 2.0% in April to mark the fastest pace of growth since April 2012, while the core Consumer Price Index (CPI) advanced 1.4% after expanding 1.3% the month prior. The uptick in price growth propped up the Canadian dollar, with the USD/CAD slipping back below the 1.0900 handle, and the dollar-loonie continued to trade lower throughout the day as the pair closed at 1.0864.

--- Written by David Song, Currency Analyst

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

http://www.dailyfx.com/forex/fundamental/us_dollar_index/daily_dollar/2014/06/19/Bearish-USD-Setup-Continues-to-Take-Shape--AUD-JPY-Range-in-Focus.html

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

DISCLOSURES

News & Analysis at your fingertips.