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
Bearish
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Fed's Bullard: - Markets trust Fed to keep inflation under control - Would welcome inflation above 2% on a sustained basis - Ok if we were 0.5% above target for some time #Fed $USD
  • Fed's Bullard: - We have the right policy tools for the situation - Will wait and see on inflation as it has been too low in the past - May see more inflation in 2021 and 2022 than we're used to - Economy looks like it will be robust in 2021 #Fed $USD
  • Forex Update: As of 17:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: -0.07% 🇨🇭CHF: -0.20% 🇯🇵JPY: -0.25% 🇬🇧GBP: -0.60% 🇳🇿NZD: -0.66% 🇦🇺AUD: -0.80% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/NNanHtxT1n
  • Fed's Kashkari: - Uptick in real yields would give me concern, could warrant a policy response, but not seeing that - The 10yr real yield is basically flat from where it was last summer - Recent movements in Treasury markets suggest Fed's new framework is working #Fed $USD
  • Fed's Kashkari: - The Fed has powerful tools if inflation starts to climb - We are not concerned about the Fed's willingness to deal with high inflation, we need to get there first #Fed $USD
  • Fed's Kashkari: - The true unemployment rate is around 9.5% - It would be great to get back to full employment by 2023 - Full employment to me is when employment and wage growth are strong enough to get to 2% inflation #Fed $USD
  • Indices Update: As of 17:00, these are your best and worst performers based on the London trading schedule: FTSE 100: 0.39% France 40: 0.30% Germany 30: 0.28% Wall Street: 0.09% US 500: -0.23% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/cTEQGqNWFV
  • $USDCHF is continuing to strengthen today, now trading above the 0.9300 level. The pair is currently at its highest point since last July after three weeks of continued strength, rising from 0.8900 in mid February to its current levels. $USD $CHF https://t.co/WCVGdCvLFq
  • Hey traders! Wrap up your week with a quick update on #NFP and more from @DailyFX Chief Strategist @JohnKicklighter 👇 https://t.co/zrOo2scbiE
  • US, EU said to reach deal to suspend Boeing-Airbus tariffs. $USD $EUR
Lackluster Canada Consumer Price Index (CPI) to Fuel USD/CAD Recovery

Lackluster Canada Consumer Price Index (CPI) to Fuel USD/CAD Recovery

David Song, Strategist

- Canada Consumer Price Index (CPI) to Narrow to Annualized 1.5%- Lowest Reading Since December.

- Core Rate of Inflation to Pick Up for First Time in 2017.

Trading the News: Canada Consumer Price Index (CPI)

Canada CPI

A slowdown in Canada’s Consumer Price Index (CPI) may undermine the recent strength in the loonie, but a pickup in the core rate of inflation may fuel further losses in USD/CAD as it puts pressure on the Bank of Canada (BoC) to lift the benchmark interest rate off of the record-low.

Why Is This Event Important:

The BoC may gradually change its tune over the coming months as officials note ‘the Canadian economy’s adjustment to lower oil prices is largely complete,’ and Governor Stephen Poloz and Co. may show a greater willingness to start normalizing monetary policy as ‘growth will gradually strengthen and broaden over the projection horizon.’ However, the central bank may merely try to buy more time at the next meeting on July 12 as ‘the Bank’s three measures of core inflation remain below two per cent and wage growth is still subdued,’ and more of the same from the BoC may keep the broader outlook for USD/CAD tilted to the topside especially as the Federal Open Market Committee (FOMC) appears to be on course to unload its balance sheet later this year.

Have a question about the currency markets? Join a Trading Q&A webinar and ask it live!

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

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

APR

2017

05/19/2017 12:30 GMT

1.7%

1.6%

+11

-50

April 2017 Canada Consumer Price Index (CPI)

USD/CAD 5-Minute

USD/CAD Chart

Canada’s Consumer Price Index (CPI) unexpectedly held steady at an annualized 1.6% in April, with the core rate of inflation highlighting a similar dynamic as the figure grew another 1.3% per annum during the same period. A deeper look at the report showed the weakness was led by a 2.0% decline in prices for clothing & footwear, which was followed by a 1.1% contraction in the cost for food, while gasoline prices surged an annualized 15.9% in April. The Canadian dollar lost ground immediately following the release, but the market reaction was short-lived, with USD/CAD slipping back below the 1.3550 region to end the day at 1.3509.

How To Trade This Event Risk(Video)

Bearish CAD Trade: Headline & Core Inflation Remains Subdued

  • Need a green, five-minute candle following the CPI report to favor a long USD/CAD trade.
  • If market reaction favors a bearish loonie trade, buy USD/CAD with two separate lots.
  • Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial target is met, set reasonable limit.

Bullish CAD Trade: Canada CPI Exceeds Market Expectations

  • Need a red, five-minute USD/CAD candle to consider a long loonie trade.
  • Implement the same setup as the bearish loonie trade, just in reverse.

Potential Price Targets For The Release

USD/CAD Daily

USD/CAD Daily Chart

Chart - Created Using Trading View

  • Broader outlook for USD/CAD remains constructive as the pair largely preserves the upward trend carried over from 2016, but the pair may continue to consolidate over the near-term especially as the Relative Strength Index (RSI) extends the bearish formation carried over from the previous month.
  • In turn, USD/CAD may continue to cling to trendline support, but a break of the June-low (1.3165) may expose the 1.3150 (78.6% retracement) hurdle, with the next downside region of interest coming in around 1.2970 (23.6% expansion) to 1.2990 (23.6% retracement), which largely lines up with the 2017-low (1.3076).
  • Interim Resistance: 1.3790 (100% expansion) to 1.3840 (61.8% retracement)
  • Interim Support: 1.3280 (50% retracement) to 1.3310 (38.2% retracement)

Make Sure to Check Out the DailyFX Guides for Additional Trading Ideas!

IG Sentiment

Retail trader data shows 69.5% of traders are net-long USD/CAD with the ratio of traders long to short at 2.28 to 1. In fact, traders have remained net-long since June 07 when USD/CAD traded near 1.34474; price has moved 1.6% lower since then. The number of traders net-long is 9.3% higher than yesterday and 2.6% higher from last week, while the number of traders net-short is 18.9% lower than yesterday and 18.2% higher from last week. For more information on retail sentiment, check out the new gauge developed by DailyFX based on trader positioning.

--- 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.

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

DISCLOSURES