On Thursday of last week, the USD/CAD approached the 1.37000 level but was pushed backward. A low yesterday around 1.36050 was seen and as of this writing the USD/CAD is near the 1.36365 mark with normal trading being exhibited via price action. The move lower since last Thursday correlated to many other major currency pairs, but Forex conditions remain nervous, and getting a proper reading on behavioral sentiment is difficult.
While last week’s Consumer Price Index numbers met their expectations via the core number in the U.S. last Thursday, the broad numbers did show a very slight increase. Immediately in Forex, this caused some buying of the USD in many cases, but this also ran out of power depending on the currency pair. The USD/CAD was among the majors that demonstrated a move higher on Thursday followed by bearish momentum, and yesterday’s lows reflected broad market action.
Risk Adverse Barometers Causing Tension for USD/CAD
The global markets remain fragile as risk-adverse investing is certainly being seen. The ability of the USD/CAD to move lower has run into near-term support levels. The currency pair was trading below 1.36000 last week on Tuesday and Wednesday, before the knee-jerk reaction to the slightly higher CPI numbers from the U.S. on Thursday. The reversal lower since the first response to the inflation numbers has not been able to really break through the 1.36000 mark again in the short term.
Importantly, today's CPI numbers will come from Canada and this will certainly have an effect on the USD/CAD, but also from the U.S. there will be Retail Sales figures reported. The combination of inflation data from Canada, and consumer spending numbers from the U.S. will cause more volatility in the USD/CAD which will make trading before the data is published problematic.
Economic Data and Fragile Behavioral Sentiment
While the USD/CAD has been able to produce a downward trajectory since Thursday of last week, traders should anticipate plenty of volatility in the currency pair over the next five hours. Speculators should expect the trading range to expand and grow wider. Risk management will be essential today.
- Inflation numbers from Canada are expected to decline via the Consumer Price Index numbers today.
- Retail Sales figures from the U.S. are anticipated to come in below last month’s results.
- If these two reports meet expectations there is a chance the USD/CAD could trade lower, but traders need to also monitor and factor in the risk that nervous conditions are causing, and investors may produce more volatility near-term.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.36495
Current Support: 1.36210
High Target: 1.36950
Low Target: 1.35775
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