Uptick in Canada Consumer Price Index (CPI) to Fuel USD/CAD Weakness

Canada Consumer Price Index (CPI) to Pick Up for First Time Since January.

Core Inflation Unexpectedly Climbed an Annualized 1.4% in June.

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Trading a News: Canada Consumer Price Index (CPI)

Canada CPI

USD/CAD stands during risk of fluctuating a decrease following a Federal Open Market Committee (FOMC) Minutes as Canada’s Consumer Price Index (CPI) is projected to boost for a initial time given January.

Signs of rising cost pressures might pull a Bank of Canada (BoC) to broach another rate-hike in 2017, and a executive bank might adopt a some-more assertive proceed in normalizing financial process as ‘the outlay opening is now projected to tighten around a finish of 2017, progressing than a Bank expected in a Apr Monetary Policy Report (MPR).’ In turn, Governor Stephen Poloz and Co. might ready Canadian households and businesses for aloft borrowing-costs during a successive assembly on Sep 6 generally as ‘the factors behind soothing acceleration seem to be mostly temporary.’

However, a gloomy enlargement might column adult USD/CAD as it encourages a BoC to keep a benchmark seductiveness rate on reason via a residue of a year.

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

June 2017 Canada Consumer Price Index (CPI)

USD/CAD 5-Minute


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Canada’s Consumer Price Index (CPI) slowed for a second true month in June, with a title reading squeezing to an annualized 1.0% from 1.3% a month before to symbol a slowest gait of enlargement given Oct 2015. Nevertheless, a core rate of acceleration suddenly climbed to an annualized 1.4% from 1.3% during a same duration to prominence to initial arise given Dec 2016. The Canadian dollar modernized conflicting a U.S. counterparts notwithstanding a collection of churned information prints, with USD/CAD slipping subsequent a 1.2600 hoop to finish a day during 1.2541.

How To Trade This Event Risk(Video)

Bullish CAD Trade: Headline Core Inflation Picks Up in July

  • Need a red, five-minute candle successive to a recover to cruise a brief USD/CAD trade.
  • If marketplace greeting favors a bullish loonie position, sell USD/CAD with dual apart lots.
  • Set stop during a near-by pitch high/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial aim is met, set reasonable limit.

Bearish CAD Trade: Canada CPI Report Disappoints

  • Need a green, five-minute USD/CAD candle to cruise a brief loonie position.
  • Implement a same setup as a bullish loonie trade, only in a conflicting direction.

Potential Price Targets For The Release

USD/CAD Daily Chart

USD/CAD Daily Chart

Chart – Created Using Trading View

  • The miscarry from a July-low (1.2413) might continue to uncover as USD/CAD threatens a ceiling trend carried over from a prior month; a Fibonacci overlie around 1.2770 (38.2% expansion) to 1.2780 (38.2% expansion) might continue to offer insurgency generally as a span triggers a array of reduce highs lows.
  • Another tighten subsequent a near-term jump around 1.2620 (50% retracement) to 1.2640 (61.8% expansion) might coax a pierce behind towards a Fibonacci overlie around 1.2510 (78.6% retracement) to 1.2540 (61.8% expansion), with a successive segment of seductiveness entrance in around 1.2410 (100% expansion) to 1.2440 (23.6% expansion), that incomparable lines adult with a 2017-low (1.2413).
  • Interim Resistance: 1.2940 (38.2% expansion) to 1.2980 61.8% retracement)
  • Interim Support: 1.2410 (100% expansion) to 1.2440 (23.6% expansion)

USD/CAD Retail Sentiment

USD/CAD Retail Sentiment

Track Retail Sentiment in Real-Time with a New Gauge Developed by DailyFX

Retail merchant information shows 74.6% of traders are net-long USD/CAD with a ratio of traders prolonged to brief during 2.94 to 1. In fact, traders have remained net-long given June 07 when USDCAD traded nearby 1.3481; cost has changed 6.6% reduce given then. The series of traders net-long is 12.7% reduce than yesterday and 1.0% reduce from final week, while a series of traders net-short is 17.3% reduce than yesterday and 9.7% reduce from final week.

— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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