- CAD Supports Oil Profit
- Higher-than-expected CPI for the rapid revaluation of Hawkishi
CAD Supports Oil Benefits
The Canadian dollar has outperformed the rest of the G10 package as the commodity currency is supported by rising oil prices. Overnight, the latest API crude oil inventory report showed a higher-than-expected 4.4 ml barrel, which supported the price of oil. However, if the recent turbulence in Chinese stock markets persists, it can be expected to cover oil prices.
Oil prices lead to a firmer CAD
Higher-than-expected CPI for the rapid revaluation of Hawkishi
In addition to oil prices, today’s CPI report could provide participants with a catalyst for a long-term recovery of the CAD should inflation data exceed expectations. Base effects continue to play a role in overestimating inflation rates around the world, Australia is the best example overnight, and so I expect nothing more than today’s figure. It will be recalled that the BoC is still unpleasant and is one of the first G10 central banks to raise interest rates, or at least to signal its intention to do so. This means that while concerns about the proliferation of the Delta variant have grown, leading to tighter stakes, Canada’s vaccine program is working best in the world.
Nevertheless, I am aware of the fact that the focus will be on the Fed meeting later today, but at the end of the month, which is usually USD likely to attract the attention of some market participants. Therefore, if inflation data were to exceed expectations, I would prefer to trade CADs on crosses, e.g. Euro. Although the USD / CAD should reach 1.26 seconds at the end of the month, it can be a good place to fade. The initial target is 20DMA, located at 1.2525, with a break below, opening the door to 1.2480-85.
USD / CAD chart: daily schedule