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USD/CAD Breaking News: Loonie Pops on Inflation Beat

USD/CAD Breaking News: Loonie Pops on Inflation Beat

Warren Venketas, Analyst

USD/CAD Analysis

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HAWKISH PRESSURE MOUNTS ON BANK OF CANADA TO HIKE RATES

Canada’s inflation data for the January period beat expectations on both core and headline prints. This adds to tightening bets on an already hawkish Bank of Canada. USD/CAD reacted expectedly by ticking lower post-release, outperforming strong US retail sales data coming in at 3.8%.

usdcad economic calendar

Source: DailyFX Economic Calendar

A breakdown of CPI constituents are outlined in the table below:

canadian cpi breakdown

CAD has been protected from geopolitical risks due to the rising oil price which rallied as a consequence of a possible Russian invasion. Despite the safe-haven appeal of the dollar, the loonie managed to hold value. All eyes now point to FOMC later today for clues on rate hike aggression.

USD/CAD DAILY CHART

USD/CAD daily chart

Chart prepared by Warren Venketas, IG

Key resistance levels:

  • 1.2964
  • 1.2797

Key support levels:

  • 1.2640
  • 1.2500

IG CLIENT SENTIMENT DATA POINTS TO SHORT-TERM DOWNSIDE

IGCS shows retail traders are currently prominently long on USD/CAD, with 69% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment, and the fact traders are net-long is suggestive of a bearish disposition.

Contact and follow Warren on Twitter: @WVenketas

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

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