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
Bearish
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Japanese Gov't recommends 2-week extension of Tokyo virus emergency - BBG $JPY
  • While the rise in yields is weighing on risk trends, carry trade didn't seem to take the hit. In fact, the charge in US yields seems to have far outweighed the de-risking from $USDJPY's perspective: https://t.co/KpOpgopOep
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: -0.09% 🇬🇧GBP: -0.40% 🇦🇺AUD: -0.69% 🇳🇿NZD: -0.81% 🇯🇵JPY: -0.90% 🇨🇭CHF: -0.97% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/8Tvotykz9y
  • Commodities Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.33% Gold: -0.69% Silver: -2.64% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/faJTbi16VK
  • AUD/USD now off daily lows, remains much weaker as a result of broad US Dollar strength $AUDUSD https://t.co/OkdKWbepAR
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 93.13%, while traders in GBP/JPY are at opposite extremes with 70.14%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/XXOjh5LmaB
  • Silver price action stalls between Moving Averages. Platinum prices currently confined by Fibonacci Support. Get your market update from @Tams707 here:https://t.co/Nbl8FDmfps https://t.co/VyuZzP8w2q
  • US Markets at the Close $NDX 12464.0 -1.73% $SPX 3768.49 -1.34% $DJI 30924.14 -1.11%
  • USD/JPY stronger during trade, now pushing towards 108 level $USDJPY https://t.co/GemouFGvHF
  • Indices Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Wall Street: -0.02% US 500: -0.03% Germany 30: -0.52% FTSE 100: -0.53% France 40: -0.71% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/jsQ36v1JJy
US Dollar Forecast: USD/CAD Eyes FOMC Minutes & Canadian CPI

US Dollar Forecast: USD/CAD Eyes FOMC Minutes & Canadian CPI

Rich Dvorak, Analyst

US DOLLAR FORECAST: FOMC MINUTES, CANADIAN CPI & LATEST CORONAVIRUS HEADLINES SET SPOT USD/CAD PRICE ACTION IN THE SPOTLIGHT

  • US Dollar strength has reverberated across the forex market since the start of the year with the DXY Index spiking 3.2% since its December 31 low
  • FOMC minutes from the January 2020 Fed meeting on deck for release might provide a boost to the US Dollar throughout Wednesday’s trading session
  • USD/CAD price action has potential to get a jolt from the latest Canadian CPI report and coronavirus developments as well

USD price action has risen an impressive 3.2% year-to-date according to performance in the US Dollar Index. The astounding ascent recorded by the US Dollar over the last several trading sessions has pushed the DXY Index toward the 100.00 price level and to its highest level since October last year.

US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (AUGUST 2019 TO FEBRUARY 2020)

DXY Index Price Chart US Dollar Forecast

Chart created by @RichDvorakFX with TradingView

Dominance exhibited by the US Dollar is owed in part to traders seeking safe-haven currencies as the novel coronavirus outbreak plagues market sentiment and risk appetite. This fundamental theme has provided a positive tailwind to spot USD/CAD price action considering the correlation between the Canadian Dollar and oil.

Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Rich Dvorak
Trading Forex News: The Strategy
Get My Guide

That said, outlook for USD/CAD over the short-term likely hinges largely on upcoming releases of FOMC minutes and Canadian CPI data, which are due Wednesday, February 19 at 19:00 GMT and 13:30 GMT respectively.

USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY & TRADING RANGES

USD Price Chart US Dollar Trading Forecast

Scheduled event risk surrounding USD/CAD has steered its overnight implied volatility reading to 4.9%, which is above its 20-day average of 4.2%. The uptick in expected currency volatility is observable across other US Dollar currency pairs like EUR/USD which just plunged to its weakest level since April 2017.

USD Forecast
USD Forecast
Recommended by Rich Dvorak
Download our Comprehensive 1Q-2020 US Dollar Forecast
Get My Guide

Aside from coronavirus fallout, USD price action has also risen significantly on the back of robust US economic data such as monthly nonfarm payrolls. Resilience of the US economy has afforded the FOMC with flexibility to shift away from its dovish posturing last year to a more neutral stance, which has exacerbated US Dollar strength.

USD/CAD PRICE CHART: DAILY TIME FRAME (AUGUST 2019 TO FEBRUARY 2020)

USDCAD Price Chart

As such, the US Dollar has potential to extend its rally considering the likelihood that the upcoming release of FOMC minutes underscore firming monetary policy outlook from the Federal Reserve.

If the latest FOMC minutes reiterate a less-dovish Fed, corresponding strength in the US Dollar might be felt by spot USD/CAD in particular if Canadian CPI and other key inflation indicators tracked by the BoC cross the wires below consensus estimates earlier during Wednesday’s trading session.

USD/CAD MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -11% -17% -13%
Weekly -15% 27% -4%
Learn how to use sentiment in your trading strategy
Get My Guide

This development might send spot USD/CAD prices snapping higher off technical support provided by the 23.6% Fibonacci retracement level of its most recent bullish leg.

On the contrary, a sticky Canadian CPI datapoint could offset possible upside in USD/CAD price action and perhaps cause the major currency pair to extend lower toward its 34-day exponential moving average.

Nevertheless, USD/CAD is estimated to fluctuate within a 68-pip range between 1.3218-1.3286 over the next 24-hours with a 68% statistical probability judging by its overnight implied volatility reading of 4.9%.

Keep Reading: Gold Nears 7-Year High on Coronavirus Impact; Stocks to Slide Next?

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

DISCLOSURES