USD/CAD remains under pressure ahead of Canadian CPI
Gary Christie December 16, 2020 6:00 AM
Here are some key levels to watch in the decline: Chart
The US Dollar was bearish against all of its major pairs on Tuesday. On the US economic data front, Empire Manufacturing unexpectedly fell to 4.9 on month in December (6.3 expected), from 6.3 in November. Finally, Industrial Production rose 0.4% on month in November (+0.3% expected), compared to a revised +0.9% in October.
On Wednesday, the Mortgage Bankers Association's Mortgage Applications data for the week ending December 11th is expected. Retail Sales Advance for November is expected to slip 0.3% on month, compared to +0.3% in October. Markit's US Manufacturing Purchasing Managers' Index for the December preliminary reading is expected to fall to 55.8 on month, from 56.7 in the November final reading. Finally, the Federal Open Market Committee (FOMC) is expected to keep the Federal Funds Target Rate between 0.00% and 0.25%.
The Euro was bearish against most of its major pairs with the exception of the USD. In France, November inflation rate was confirmed at +0.2% on month, as expected. Also, in the UK, the three-month (August-October) jobless rate was released at 4.9% (vs 5.1% expected).
The Australian dollar was bullish against most of its major pairs with the exception of the CAD and GBP.
Traders may see some added volatility on Wednesday when Canada announces its inflation rate for November. Historically, CPI data adds 70.5 pips of volatility on average in the 4 hours after past events. Economists are anticipating a slight increase to 0.8% vs 0.7% in Oct. Looking at the chart, the USDCAD remains in a well-defined downtrend after the pair broke below a consolidation zone at the beginning of December. Price action is riding the lower Bollinger band indicating strong bearish momentum. As long as 1.299 resistance is not broken to the upside we are anticipating a continuation of the trend towards the next support level of $1.2555.
Source: GAIN Capital, TradingView
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.