How to trade the Canadian Inflation report with USD/CAD

  • The inflation report is closely watched by the BOC and impacts the Canadian Dollar. The BOC Core CPI YoY is the key figure.
  • The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
  • The USD/CAD moved, on average, 55 pips in the 15 minutes after the data release and 86 pips in the following 4 hours.

Selling USD/CAD Scenario

  • Tradable Positive Trigger: +2.04 deviation (1.98%) [SELL Pair]

  • Key Support Level: 1.2790

This time, if it comes out at higher than expected with a relative deviation of +2.04 or higher (1.98% or higher in actual terms), the pair may go down reaching a range of 64 pips in the first 15 minutes and 80 pips in the following 4 hours.

1.2790 supported the pair in late April and in early May. 1.2750 was the May 17th low and serves as an immediate line of support. Close by, 1.2730 was the May 12th trough. Further down, 1.2680 was a high swing back in February. 

Buying USD/CAD Scenario

  • Tradable Negative Trigger: -2.54 deviation (0.67%) [BUY Pair]

  • Key Resistance Level: 1.2840

If it comes out lower than expected at a relative deviation of -2.54 or less (0.67% or lower in actual terms), the USD/CAD may go up reaching a range of 36 pips in the first 15 minutes and 79 pips in the following 4 hours.

1.2840 capped the pair in late April. It is followed by 1.2930 which was a swing high on May 15th. The 1.3000 level looms above. 

USD/CAD Levels on the Chart

USD/CAD Technical Analysis May 18 2018

More data

The Bank of Canada expects the economy and inflation to pick up in the second quarter after a slow start to the year. But are things picking up? The inflation report will provide some answers. 

See the preview: Canadian double-feature Friday preview: Determining the direction of USD/CAD

In the last five releases, the USD/CAD moved, on average, 55 pips in the 15 minutes after the data release and 86 pips in the following 4 hours.

The previous release had a negative surprise of -0.35 regarding relative deviation and the USD/CAD reached an 83 pip range in the first 15 minutes and a range of 117 pips 4 hours after that.

Follow the publication of the figure on the economic calendar. Watch out for the data from the Market Impact tool, projecting the potential price changes according to the deviation. Here is the Market Impact Studies Users Guide.

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