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
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
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bearish
GBP/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
USD/JPY
Bullish
More View more
Real Time News
  • The US Dollar could gain as it forms bullish technical formations against the Singapore Dollar and Malaysian Ringgit. USD/PHP may have bottomed, will USD/IDR rise next? Find out from @ddubrovskyFX here:https://t.co/3UIKmbLIvD https://t.co/me8wMRpJjE
  • What is seasonal change in volatility. Are we going through one right now? Find out: https://t.co/G0qfpOmMl2 https://t.co/HXCQzUQgxA
  • The US Dollar will be bracing for a cascade of political risks including the first presidential debate, ongoing stimulus talks, the Supreme Court vacancy against the backdrop of key employment data. Get your #currencies update from @ZabelinDimitri here: https://t.co/quU4MmUjxA https://t.co/jF6ubwRz1P
  • The Indian Rupee may be at risk to the US Dollar as USD/INR attempts to refocus to the upside. This is as the Nifty 50, India’s benchmark stock index, could fall further. Get your $USDINR market update from @ddubrovskyFX here:https://t.co/3wsYlSxd26 https://t.co/PfIVibmqn1
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/lKvEMf4QRe
  • Weakness in equity markets continued last week as losses built and technical patterns hint further bearishness might be ahead. Get your #equities update from @PeterHanksFX here: https://t.co/GGVrB3r7if https://t.co/HPHUC8EG3o
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/5uSWKoLkd6 https://t.co/q80wSAoxXP
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/7mc19Gxrvm
  • #Gold prices succumbed to selling pressure as the US Dollar soared this past week What is #XAUUSD facing these next few days and can these fundamental forces extend its selloff? Check out my outlook here - https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/09/26/Gold-Price-Outlook-Rising-US-Dollar-Sinks-XAUUSD-Will-Losses-Extend.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/gPhy0KoW3W
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/38gTDnpPbn https://t.co/Xtk5g4JQEB
Rising Fed Hike Odds Lift US Dollar; USD/CAD Breakout on Hold Post-Canadian Data

Rising Fed Hike Odds Lift US Dollar; USD/CAD Breakout on Hold Post-Canadian Data

Share:

Talking Points:

- USD/CAD fails to get traction through C$1.3145.

- Fed rate hike odds have jumped from Dec'17 to Jun'17 since NFPs.

- As market volatility stays elevated post-Brexit, it's a good time to review risk management principles.

The US Dollar has enjoyed a nice run the past two weeks, in part thanks to the best US Nonfarm Payrolls report of the year for June. While data hasn't been astounding, it has been solid; the Atlanta Fed's GDPNow growth tracker is pointing to +2.4% growth (annualized) in Q2'16. Against the backdrop of financial market stability in the post-Brexit world, the Fed may yet to have a window of opportunity to raise rates this year.

Over the past two weeks, as the USDOLLAR Index has shook off its congestion from June, amid a lack of other data on the level of the June NFP report, rising Fed rate hike expectations have been the catalyst for broad US Dollar strength. Pre-NFPs on July 8, Fed funds futures contracts were implying the Fed's next rate hike would come in December 2017.

Table 1: Fed Rate Hike Expectations (July 22, 2016)

Rising Fed Hike Odds Lift US Dollar; USD/CAD Breakout on Hold Post-Canadian Data

Today, rate expectations have been pulled forward to imply the first Fed rate hike is coming in June 2017. Even though expectations have been pulled forward six months - the easily explainable source of recent US Dollar strength - there is evidently more left in the tank. If the Fed comes out next week and chirps a hawkish tone - reaffirming its commitment to raise rates at least once this year, by December - there is still a six month gap in rate expectations to be closed from current market pricing.

Correlation is not causation, but the Fed has not raised rates unless market participants have priced in at least a 60% chance in the front month of them doing so. Continued progress in the 60% threshold to December 2016 should help the US Dollar over the coming weeks.

Elsewhere this morning, USD/CAD failed to get traction over the key C$1.3145 level, seemingly one of the only pairs (next to EUR/USD) not participating in broad US Dollar strength. While a breakout earlier looked possible, the much better than expected Canadian consumption and inflation data this morning has nixed the opportunity in the short-term.

Chart 1: USD/CAD Daily Chart (March to July 2016)

Please add a description for the image.

Statistics Canada released the June Consumer Price Index earlier today. The report showed June Headline CPI rose +0.2% from +0.4% in May (m/m), yearly Headline CPI stayed unchanged at +1.5%; the market had anticipated a slowdown to +1.4% (y/y). Concurrently, the National Statistics agency published its May Retail Sales data, which further supported the Loonie. The bulletin revealed retail trade grew +0.2% m/m vs expectations of a flat print. In addition, Retail Sales Excluding Auto also beat estimates at+ 0.9% m/m. It is important to note that the market had forecast a +0.3% rise.

All things considered, both retail sales and inflation data support the case for the the Bank of Canada to remain on the sidelines going forward despite calls for additional monetary stimulus by some market participants. Today's figures should help shake off concerns of a dip toward recession after disppointing economic data in recent months handicapped the Canadian Dollar.

Read more: ECB Keeps Rates on Hold; EUR/USD Shifts Lower after Draghi

--- Written by Christopher Vecchio, Currency Strategist and Diego Colman, DailyFX Research

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

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

DISCLOSURES