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
Bullish
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
Mixed
USD/JPY
Mixed
Gold
Mixed
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • RT @iv_technicals: Gentle reminder: Nov $VIX futures roll off today; Dec goes in front, currently trading 15.50
  • LIVE NOW! Currency Strategist @PaulRobinsonFX discusses important technical developments relevant to short to intermediate-term commodity and equity index traders here - https://www.dailyfx.com/webinars/816147795?CHID=9&QPID=917720
  • Lessons from Bretton Woods are forgotten, the US-China #tradewar represents a true existential threat to the post-World War II international trade order, and in turn, the globalized economy that has grown out of the ashes of history. More from @CVecchioFX :https://t.co/paaBxX6Xt0 https://t.co/q4RfSm5E8I
  • LIVE IN 30 MIN: Currency Strategist @PaulRobinsonFX discusses important technical developments relevant to short to intermediate-term commodity and equity index traders here - https://www.dailyfx.com/webinars/816147795?CHID=9&QPID=917720
  • ECB's De Guindos says monetary policy side effects are becoming more evident $EUR
  • Join @PaulRobinsonFX 's #webinar at 5:30 AM ET/10:30 AM GMT to gain insight on indices and commodities for the active trader. Register here: https://t.co/gghsFsZYlx https://t.co/ujAbNhzLpz
  • Why financial market traders must monitor both monetary and fiscal policy?Find out from @MartinSEssex here: https://t.co/Fkzk88Y5gm https://t.co/gbDTCgqHI5
  • Heads Up:🇬🇧 GBP Unit Labor Costs (YoY) (2Q) due at 09:30 GMT (15min), Actual: N/A Expected: N/A Previous: 2.1% https://www.dailyfx.com/economic-calendar#2019-11-20
  • RT @mynamejd: SP500 earnings revisions up & down per sector - Source Refinitiv https://t.co/bvmlQCltkN
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.87%, while traders in US 500 are at opposite extremes with 79.99%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/06877Dk0Iz
USDCAD Rebound to Benefit from Sticky US Consumer Price Index (CPI)

USDCAD Rebound to Benefit from Sticky US Consumer Price Index (CPI)

2019-09-12 05:00:00
David Song, Currency Strategist
Share:

Canadian Dollar Talking Points

USDCAD struggles to retain the rebound from earlier this week, but updates to the US Consumer Price Index (CPI) may keep the exchange rate afloat as the figures are anticipated to highlight sticky inflation.

USDCAD Rebound to Benefit from Sticky US Consumer Price Index (CPI)

USDCAD has been under pressure following the Bank of Canada (BoC) meeting as the central bank endorses a wait-and-see approach for monetary policy, but developments coming out of the US may sway the near-term outlook for the exchange rate as the CPI is anticipated to hold steady at 1.8% for the second consecutive month.

Image of DailyFX economic calendar

At the same time, the core rate of inflation is projected to increase to 2.3% from 2.2% in July, and signs of stick price growth may influence the monetary policy outlook as Federal Reserve Chairman Jerome Powellasserts that the economic outlook remains “favorable.

Image of Fed Fund futures

However, it remains to be seen if the Federal Open Market Committee will continue to insulate the US economy as Fed Fund futures still highlight overwhelming expectations for a 25bp reduction on September 18, and the central bank may come under increased pressure to implement a rate easing cycle as President Donald Trump tweets that the “the Federal Reserve should get our interest rates down to zero or less.”

In turn, the FOMC may continue to alter the forward guidance for monetary policy, and market participants are likely to pay increased attention to the Summary of Economic Projections (SEP) as a growing number of Fed officials forecast a lower trajectory for the benchmark interest rate.

With that said, the Canadian Dollar may outperform its US counterpart over the coming days, and the diverging paths for monetary policy may spur a broader shift in USDCAD behavior as the exchange rate snaps the upward trend carried over from the previous year.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

USD/CAD Rate Daily Chart

Image of usdcad daily chart

Source: Trading View

  • Keep in mind, the broader outlook for USDCAD is no longer constructive as the exchange rate clears the February-low (1.3068), with the break of trendline support fostering a bearish outlook for Dollar Loonie.
  • At the same time, the rebound from the 2019-low (1.3016) appears to have stalled ahead of the Fibonacci overlap around 1.3410 (38.2% expansion) to 1.3420 (78.6% retracement), with the Relative Strength Index (RSI) offering a bearish signal as the oscillator snaps the bullish formation from July.
  • However, the lack of momentum to break/close below the Fibonacci overlap around 1.3120 (61.8% retracement) to 1.3130 (61.0% retracement) may generate range-bound conditions, with a move above 1.3220 (50% retracement) raising the risk for a move back towards the 1.3280 (23.6% expansion) to 1.3330 (38.2% retracement) region.

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES

News & Analysis at your fingertips.