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Canadian CPI Pulls USD/CAD Below 1.10

The USD/CAD showed a bullish sign yesterday after the BoC monetary policy meeting. After some shaking, USD/CAD pushed north of 1.10, which also showed bullish breakout from a falling trendline, which turned into support. 

The 1H RSI reading has been tagging 70 and holding above 40, a sign of persistent bullish momentum in this time-frame.

The 1H chart shows a bullish market since last week, but today's CPI data is giving some headwind. 

(usdcad 1h chart, 4/17)

The headline CPI for the month of March was 0.6%, which was slightly lower than the 0.8% in February, but beat forecast of about 0.4%. For a month-to-month basis, reading can be considered slightly elevated if the annual CPI target is to be 2.0%. 

The year-on-year inflation in March was 1.5%, up from the 1.1% in February, and matches the highest since June 2012. 

The trend of higher inflation rates since Q4 of 2013 can indeed be positive for the CAD.

The USD/CAD is still bullish. If traders can shrug off the positive inflation data for Canada, we have the next resistance in the 1.1075-80 area. 

A break below 1.0940 will be needed to reintroduce the bearish outlook.