USDCAD Analysis
| Performance after Wednesday | |||||
| Period | Pct | Chg | Momentum | ||
| Wednesday | -0.15% | -21.2 Pips |  |
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| Week to-date | -0.57% | -82.1 Pips |  |
||
| January | -0.12% | -17 Pips | |
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Upcoming key events (London Time)
Thu 01:30 PM USD Monthly Retail Trade (1-mth)
What happened lately
The U.S. Consumer Price Index (CPI) inflation rate saw mixed results in December. Overall CPI inflation increased to 0.4% from 0.3% in November, suggesting a general rise in consumer prices. However, the CPI inflation rate excluding the volatile food and energy sectors decreased to 0.2% from 0.3%. Similarly, the 12-month CPI inflation excluding these sectors decreased slightly from 3.3% to 3.2%, although the overall 12-month CPI inflation increased to 2.9% from 2.7%, indicating inflationary pressures primarily driven by non-core components. Meanwhile, the U.S. Treasury Budget Statement showed significant improvement, with the deficit narrowing to $87 billion from $367 billion in November.
Producer prices also presented a varied picture. The monthly Producer Price Index (PPI) decreased to 0.2% from 0.4%, indicating a slowing growth in the price of goods at the production level. Excluding food and energy, there was no change in the monthly PPI, as it remained at 0%. However, the 12-month PPI increased from 3% to 3.3%, while the 12-month PPI excluding food and energy rose slightly to 3.5% from 3.4%. This indicates a long-term build-up of inflationary pressures across the production sector despite the short-term deceleration.
The U.S. economic data presents a mixed picture with some indications of inflationary pressure, particularly over the longer term. For the USDCAD pair, these inflation dynamics could lead to increased anticipation of monetary policy actions by the U.S. Federal Reserve, potentially tightening to curb inflation. This scenario often results in a stronger USD, influencing exchange rate movements. However, the immediate improvement in the U.S. Treasury budget could also support a stable or appreciating USD. Considering the recent drop of the USDCAD rate by 0.15% to 1.43328, traders may have been cautious despite the mixed data. The upcoming U.S. Monthly Retail Trade data could further influence USDCAD by affecting perceptions of economic strength and potential monetary responses, prompting market participants to closely monitor upcoming releases.
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What can we expect from USDCAD today?
USDCAD on Wednesday dropped -0.15% to 1.43328. Price is below 9-Day EMA while Stochastic is falling.
Updated daily direction for USDCAD looks bearish as the pair posted lower in Wednesday trading session.
Looking ahead for the day, immediate support level is at S1 1.42982 with break below could see further selling pressure towards S2 at 1.42636. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.43670 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.42980 would indicate selling pressure.
For the week to-date, take note that USDCAD is mixed as compared to the prior week.
Key levels to watch out:
| R3 | 1.44362 |
| R2 | 1.44016 |
| R1 | 1.43672 |
| Daily Pivot | 1.43326 |
| S1 | 1.42982 |
| S2 | 1.42636 |
| S3 | 1.42292 |
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