Canadian dollar hotspots
USD / CAD is fighting for 200 days over the SMA (1.2399), even as more and more federal reserve officials are showing a greater willingness to change gears, and updating the US consumer price index (CPI) could undermine recent exchange rate gains as inflation slows for the first time in 2021.
The post-USD / CAD NFP rally is vulnerable to a slowdown in the US CPI
USD/CAD carves a series of highs and lows US Non-Agricultural Payroll (NFP) report as the continuous improvement of the labor market puts pressure on Federal Open Market Committee (FOMC) to reduce its emergency measures, but updated consumer price indicators could US dollar as headlines are expected to narrow from 5.4% in June to 5.3%.
The main consumer price index is expected to show similar dynamics, as it will be printed at 4.3% in July, up from 4.5% in the previous month, and signs of temporary inflation may encourage the FOMC to maintain its current monetary policy stance. Governor Lael Brainard waits “to be more confident in assessing progress when we have the September data. “
President of the Boston Central Bank Eric Rosengren, A voting member of the FOMC in 2022, demands that the central bank be able to begin to end its emergency measures.this fall“In an interview with the Associated Press, the official said:” I do not believe that asset purchases have the desired effect on employment promotion. “
Speculation on a looming change in Fed policy could keep the Bank of Canada (BoC) USD / CAD afloat. ”now expects GDP growth of around 20 percent in 2021, slightly slower than expected in April, ”And a further appreciation of the exchange rate could ease the recent shift in retail sentiment, as it did earlier this year.
The IG customer feelings report shows 65.48% of traders are now net length USD / CAD, traders with a long and short relationship standing 1.90 to 1.
The number of traders in net length is 7.48% higher than yesterday and 8.72% lower than last week, while the number of short traders is 3.23% higher than yesterday and 1.13% higher than last week. The decline in the long net position is USD / CAD tries to stay above the 200-day SEA (1.2399), while rising short – term interest rates have helped alleviate crowding – out behavior, with 69.82% of traders online in pairs last week.
That being said, on prepayment USD / CAD may mitigate a recent change in retail, such as earlier this year, but The update of the US consumer price index (CPI) could undermine recent exchange rate developments, as inflation slows for the first time in 2021.
USD / CAD exchange rate daily schedule
Source: Trading View
- Keep in mind that the USD / CAD 200-day SMA (1.2574) continues to reflect a negative slope, as the exchange rate did not remain above the moving average in July, as annual low (1,2007) does not help to experiment Highest in January (1,288).
- Recent developments Relative Strength Index (RSI) shows a similar dynamics as it pulls up the trend of last year after the textbook sales signal flashed last month, and the decline from the July peak (1.2808) may indicate a continuation of the broader trend as it appears to have started to develop in the RSI.
- USD / CAD, in turn, may trade within a specified range, which appears to be limited 1.2620 (50% retracement) to 1.2650 (78.6% expansion) rangeand lack of current to maintain above 200-day SMA (1,2574) may shift the exchange rate backwards 1.2510 (78.6% retracement) area, with the next area of interest arriving 1.2410 (23.6% expansion) to 1.2440 (23.6% expansion).
- Need a pause / close above 1.2620 (50% retracement) to 1.2650 (78.6% expansion) 1.2980 (61.8% retracement) to open the area, with the next area of interest being around 1.3030 (50% expansion) to 1.3040 (50% expansion).
– Written by David Song, currency strategist
Follow me on Twitter at @DavidJSong