Loonie At Highs Ahead of Data
USDCAD is on watch today with two potentially big-volatility events to watch. On the USD side we have November inflation due while for CAD, the latest BOD rate decision is due today. USDCAD has been trading firmly higher in recent weeks given the market’s more dovish BOC’s expectations. The BOC has been cutting rates steadily while signalling further easing to come.
BOC Rate Cut Expectations
As such, the expectation today is for the bank to cut further, but by a larger .5%, taking rates down to 3.25%. If seen, this should keep USDCAD well supported through the end of the week with the pair likely to break out to fresh highs, depending on what we see with the US inflation print. However, given the expectation for a larger cut, if the BOC opts for a smaller cut, this could underwhelm CAD bears, leading to a near-term short squeeze.
US Inflation Due
On the USD front, traders will be watching to see if US inflation moved higher again last month. If the small uptick currently forecast is confirmed, this should cause too much upset. However, an upside surprise could easily ignite a fresh USD rally, weighing on December rate-cut expectations. Coupled with a large .5% BOC cut, an upside inflation surprise will be firmly bullish for USDCAD today.
Technical Views
USDCAD
USDCAD continues to push higher here with price now retesting the 1.4178 YTD highs. While above 1.4105 and with momentum studies bullish focus is on a test of the 1.4236 level next. Below there, 1.3970 is next support to watch.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.