USD/CAD eyeing 1.3100 ahead of BoC CPI and Retail Sales
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- Bank of Canada CPI and Retail Sales are scheduled on Friday at 12.30 GMT.
- Trump signs tariffs on Chinese imported goods.
The USD/CAD is trading at around 1.2935 up 0.34% on Thursday as bears drove the market down to 1.2825. This level was fairly well supported as bulls stepped in and managed to drive the Loonie back above its Thursday’s opening price and above the 20-period simple moving average.
Friday will see the Bank of Canada Consumer Price Index Core year on year expected to accelerate 0.2% to 1.4% from 1.2% the previous month while the m/m readings for February will be expected at 0.5% unchanged from January readings. Retail sales for January is expected to jump from -0.8% in January to 1.1% in February, according to analysts.
Earlier in the day Trump signed an executive memorandum on 50-60 billion imports from China and said: "This is the first of many. China seems little impressed declared: “China is strongly disappointed and firmly opposes such an action. China does not want a trade war with anyone. But China is not afraid of and will not recoil from a trade war. ... If a trade war were initiated by the US, China would fight to the end to defend its own legitimate interests with all necessary measures”. Trade wars and protectionist measure are seen broadly US Dollar negative, although the dollar index fared fairly well today as it went up 0.20%. However, the move can be seen as a correction from the bear day we saw on Wednesday with the FOMC dovish hike.
According to analysts, the Bank of Canada should start the hiking cycle from July onwards. More details here.
USD/CAD daily chart
Bulls managed to put in a reversal bar, will they have what it takes to lift the market? 1.3000 psychological figure will be the first significant resistance to overcome followed by 1.3100, the high of the week. To the downside, support is seen at 1.2800 close to Thursday's low and March 12 low; followed by 1.2700 with the 100-period simple moving average. The RSI is displaying a negative divergence while the MACD is also signaling that the bull trend might come to a pause.
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