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The USD/CAD had a stormy day of trading on Monday and early today suggests speculative forces may be standing by for more price action.
The USD/CAD is trading near the 1.29000 mark as of this writing. Traders are urged to compare the current price of the USD/CAD currency pair as they are reading this article to view differentials. Speculative positions seemingly were ignited yesterday, as financial houses may have been trying to get ahead of the Canadian Consumer Price Index data which will be released later today.
Monday’s Early Lows Abruptly saw Plenty of Buying in the USD/CAD
Early yesterday the USD/CAD was trading near the 1.27750 ratio in a rather comfortable manner. The price action matched values seen on Friday and the USD/CAD seem situated for tranquil trading. However, within a matter of hours the USD/CAD began to challenge the 1.280000 level. When the 1.28000 mark was penetrated a strong burst of buying became evident and a high of 1.29300 was touched rather quickly.
- Inflation data via the Canadian CPI is likely being speculated on by financial houses, via their perceptions regarding the outcome and it is affecting the USD/CAD.
- Traders may choose to be cautious if they do not have positions yet in the USD/CAD, and wait for the CPI results to be published before pursuing the currency pair.
The fact the USD/CAD jumped higher may indicate financial houses are wagering on the anticipated outcome in the Canadian CPI inflation statistics today. However, traders need to be cautious, because if the number comes in higher than expected, the old adage of buy the rumor and sell the fact may come into play. In other words short term speculators should remain conservative if they have weak stomachs and limited funds. Waiting for the result of the CPI to be published could be wise.
The USD/CAD is near important Resistance but has been higher in the past month
If the CPI number meets expectations today, this still may result in choppy trading. The central bank of Canada has been hawkish and is mirroring the U.S Federal Reserve in many respects. However, traders also need to consider that the 1.29250 to 1.29500 marks may be viewed as too high by many financial houses short term.
Yes, the USD/CAD spiked to 1.32000 in mid-July, but is a return of those highs likely in the near term, likely no. If the CPI number is much higher than expected, this could actually make some analyst believe the USD/CAD could go into a selling mode, because the Bank of Canada may have to act strongly with more strident interest rate hikes. Traders should be careful today with the USD/CAD.
Canadian Dollar Short-Term Outlook
Current Resistance: 1.29240
Current Support: 1.28820
High Target: 1.29740
Low Target: 1.27840
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