CAD CPI Up Next
Traders will be keeping a close eye on Canadian CPI today on the back of recent easing from the BOC. The bank has now cut three times in this cycle, after being the first to cut rates earlier this year. With the bank recently reaffirming its commitment to pressing ahead with further easing as needed, traders will be looking to today’s inflation readings as a gauge for whether the bank will cut again when it meets next week or hold until the next meeting. An uptick in dovish Fed expectations is certainly a key factor now. With traders expecting the Fed to press ahead with a larger .5% cut, this has been seen as increasing the pressure on the BOC to continue cutting. Indeed, the market is now pricing in at least a further .75% worth of BOC cuts this year.
Today’s Forecasts
Looking at the numbers for today, the market is expecting median CPI to cool to 2.2% from 2.4% prior. If seen, this would certainly keep near-term dovish expectations well supported given the bank’s 1% - 3% target range and should keep USDCAD supported. However, in light of the market’s dovish expectations, any upside surprise might see CAD rallying near-term, pushing USDCAD lower. Looking ahead, tomorrow’s FOMC meeting will be the bigger event to watch. Unless the Fed opts for a larger .5% cut we could well see USDCAD breaking firmly higher near-term.
Technical Views
USDCAD
USDCAD has rebounded recently and is now retesting the broken support at 1.3587. This is a key pivot for the market and while below here, focus is on a fresh push lower towards 1.3377 next. Above here, focus is on a continued push higher towards 1.3866 next.
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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.