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.

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
EUR/USD
Bullish
Oil - US Crude
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
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • What's the difference between leading and lagging indicators? Find out from here: https://t.co/vGx8HCagF5 https://t.co/4DGXwA8vqs
  • Struggling to define key levels? Floor-Trader Pivots assist traders in identifying areas in a chart where price is likely to approach and can be used to set appropriate targets, while effectively managing risk. Learn how to use this indicator here: https://t.co/Ye4m1FMKUW https://t.co/mAMhWbV6Jy
  • Make smart trading decisions with your free guide to trade the news. Download your free guide here.https://t.co/pb5E2KgRzW #DailyFXGuides https://t.co/E9ZmJvqO0z
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/fqxw1AoKc1
  • Gold snapped a two-week losing streak but keeps price within the broader August downtrend. These are the levels that matter on the $XAUUSD weekly chart. Get your market update from @MBForex here: https://t.co/B3Jct6mIBD https://t.co/xTGIM2hRBv
  • $GBPUSD continues to move higher, despite Friday’s weakness, as vaccination hopes continue to fuel positive sentiment despite ongoing lockdown fears and downbeat UK data. Get your market update from @nickcawley1 here: https://t.co/S8UoHzOwFN https://t.co/qI6UZdggvM
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/6wxX6oQurn
  • Recessions can devastate the economy and disrupt the fortunes of individuals, businesses, and investors. But economic decline in the business cycle is inevitable, and your trading can be defined by how you respond to crisis. learn how to prepare here: https://t.co/e4CnobJCss https://t.co/w009tJEQZn
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/rfwUWJfbz9 https://t.co/2AeO1AdD2M
  • MACD who? The Moving Average Convergence Divergence (MACD) is a technical indicator which simply measures the relationship of exponential moving averages (EMA). Find out how you can incorporate MACD into your trading strategy here: https://t.co/ZNs4Qi8ieG https://t.co/INJz4NSugQ
Sticky Canada CPI to Fuel Larger USD/CAD Correction

Sticky Canada CPI to Fuel Larger USD/CAD Correction

David Song, Strategist

- Canada’s Consumer Price Index (CPI) to Climb Annualized 1.7%- Highest Reading Since November 2014.

- Core Rate of Inflation to Hold at 2.0% for Second Consecutive Month.

For more updates, sign up for David's e-mail distribution list.

Trading the News: Canada Consumer Price Index (CPI)

A pickup in Canada’s Consumer Price Index (CPI) may heighten the appeal of the loonie and fuel a larger pullback in USD/CAD as it encourages the Bank of Canada (BoC) to retain a wait-and-see approach in 2016.

What’s Expected:

USD/CAD Canada CPI

Click Here for the DailyFX Calendar

Why Is This Event Important:

With the BoC largely endorsing a neutral outlook for monetary policy, it seems as though the central bank is approaching the end of its easing cycle, and signs of sticky price growth may prompt Governor Stephen Poloz to adopt a more hawkish tone over the coming months as the risks to the inflation outlook are ‘roughly balanced.’

Expectations: Bullish Argument/Scenario

Release

Expected

Actual

Wholesale Trade Sales (MoM) (NOV)

0.4%

1.8%

Manufacturing Sales (MoM) (NOV)

0.5%

1.0%

Business Outlook Future Sales (4Q)

10.00

16.00

Improved confidence accompanied by the recent pickup in private-sector spending may encourage Canadian businesses to boost consumer prices, and a marked pickup in the headline as well as core rate of inflation may pave the way for a near-term correction in the exchange rate as market participants scale back bets for a BoC rate-cut.

Risk: Bearish Argument/Scenario

Release

Expected

Actual

Industrial Product Price (MoM) (NOV)

0.1%

-0.2%

Raw Materials Price Index (MoM) (NOV)

-2.5%

-4.0%

Gross Domestic Product (YoY) (OCT)

-0.1%

-0.2%

However, the protracted recovery may push firms may offer discounted prices amid low input costs, and an softer-than-expected inflation report may renew the bearish sentiment surrounding the loonie as market participants look for additional monetary support in Canada.

Join DailyFX on Demandfor Real-Time Updates on the DailyFX Speculative Sentiment Index!

How To Trade This Event Risk(Video)

Bullish CAD Trade: Sticky Inflation Dampens Bets for BoC Rate-Cut in 2016

  • Need to see red, five-minute candle following the release to consider a short trade on USD/CAD.
  • If market reaction favors a bullish loonie trade, sell USD/CAD with two separate position.
  • Set stop at the near-by swing high/reasonable distance from entry; look for 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: Headline, Core CPI Fall Short of Market Forecast

  • Need green, five-minute candle to favor a long USD/CAD trade.
  • Implement same setup as the bullish Canadian dollar trade, just in reverse.

Avoid the pitfalls of trading by steering clear of classic mistakes. Review these principles in the "Traits of Successful Traders" series.

Potential Price Targets For The Release

USD/CAD Daily

USD/CAD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Long-term outlook remains tilted to the upside USD/CAD amid the broader series of higher highs & lows in the exchange rate, but the sharp pullback in the Relative Strength Index (RSI) may foreshadow a larger correction in the dollar-loonie as the oscillator comes off of overbought territory and fails to preserve the bullish formation from back in November.
  • DailyFX Speculative Sentiment Index (SSI) shows the retail crowd remains net-short USD/CAD since November 4, but the ratio continues to come off of recent extremes as it narrows to -1.89, with 35% of traders now long.
  • Interim Resistance: 1.4660 (78.6% retracement) to 1.4730 (78.6% expansion)
  • Interim Support: 1.3420 (38.2% expansion) to 1.3460 (61.8% retracement)

Impact that Canada CPI has had on USD/CAD during the last release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

NOV

2015

12/18/2015

13:30 GMT

1.5%

1.4%

+37

+30

November 2015 Canada Consumer Price Index

USD/CAD Chart

Canada’s Consumer Price Index (CPI) rose an annualized 1.4% in November after expanding 1.0% the month prior, while the core rate of inflation unexpectedly slowed to 2.0% from 2.1% during the same period. A deeper look at the report showed the cost of recreation/education slipping another 1.8% in November to lead the decline, with prices for clothing and footwear falling 0.7%, while transportation costs increased 0.4% despite weaker energy prices. Signs of easing price growth may push the Bank of Canada (BoC) to further insulate the real economy as the region emerges from a technical recession in 2015. The market reaction to the weaker-than-expected CPI print was short-lived, with USD/CAD pulling back from the 1.4000 region to end the day at 1.3957.

Read More:

GBP/USD – Trend vs Extreme Sentiment

Like Clockwork, Draghi’s Threat of Action Next Meeting Sinks EUR/USD

WTI Crude Oil Price Forecast: You Can’t Spell Turmoil without Oil

S&P 500 - Everybody Too Bearish Too Soon?

--- Written by David Song, Currency Analyst and Shuyang Ren

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

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

DISCLOSURES