USD/CAD eyes weakness below 1.3300 ahead of Fed policy and Canada's Inflation


  • USD/CAD will likely display volatile moves as the focus shifts to Fed rate policy.
  • Lower consensus for US GDP is weighing pressure on the DXY.
  • Canada’s CPI is not displaying exhaustion signals despite the BOC's faster pace of the rate hike.

The USD/CAD pair is displaying back-and-forth moves in a narrow range of 1.3270-1.3300 from the past week. The asset has sensed barricades around the critical resistance of 1.3300 and a downside move is highly expected amid an upside momentum loss. But a power-pack volatility period is promised for the market participants as investors are awaiting the release of the interest rate decision by the Federal Reserve (Fed).

A decline in consensus for US Gross Domestic Product (GDP) along with the priority of bringing price stability is impacting the US dollar index (DXY). Fed chair Jerome Powell is bound to keep up the pace of hiking interest rates to tackle the accelerating price pressures. Room for a full percent rate hike is open as the recent reading of the core Consumer Price Index (DXY) at 6.3% has renewed the upside bias for the inflation rate.

What is impacting the DXY now is the decline in US growth projections. Economists at Goldman Sachs have trimmed the US GDP rate for 2023 to 1.1% against the prior forecasts of 1.5%. The ideology behind trimming the growth prospects is the continuation of a higher pace in hiking interest rates in addition to the already tight monetary policy.

On the loonie front, Canada’s inflation data will hog the limelight. Despite the continuation of the rate tightening cycle by the Bank of Canada (BOC), price pressures are not displaying signs of exhaustion. The headline Canada CPI is looking to enter into the 8% territory vs. the prior release of 7.6%. While the core CPI that excludes fossil fuels and food bills will trim to 6% against the former figure of 6.1%.

USD/CAD

Overview
Today last price 1.3262
Today Daily Change -0.0002
Today Daily Change % -0.02
Today daily open 1.3264
 
Trends
Daily SMA20 1.3091
Daily SMA50 1.2973
Daily SMA100 1.291
Daily SMA200 1.2796
 
Levels
Previous Daily High 1.3308
Previous Daily Low 1.3227
Previous Weekly High 1.3308
Previous Weekly Low 1.2954
Previous Monthly High 1.3141
Previous Monthly Low 1.2728
Daily Fibonacci 38.2% 1.3277
Daily Fibonacci 61.8% 1.3258
Daily Pivot Point S1 1.3225
Daily Pivot Point S2 1.3186
Daily Pivot Point S3 1.3144
Daily Pivot Point R1 1.3305
Daily Pivot Point R2 1.3347
Daily Pivot Point R3 1.3386

 

 

 

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