USD/CAD traders desperately need Canadian CPI or US GDP to trigger breakout
Fawad Razaqzada December 21, 2017 11:44 AM
Today's key data comes from North America, which makes the USD/CAD one of the main charts to watch.
Today's key data comes from North America, which makes the USD/CAD one of the main charts to watch. At 13:30 GMT we will have the latest Canadian CPI and retail sales figures, as well as the final estimate for US third quarter GDP. We will also have the Philly Fed Manufacturing Index and weekly jobless claims figures released at the same time.
Canada’s headline CPI is expected to have risen by 0.2% month-over-month in November, with the year-over-year rate seen rising to 2.0% from 1.4% previously. The Common and Median measures of CPI are both expected to print +1.7% y/y while the Trimmed CPI measure is expected to show an unchanged reading of +1.5% y/y. Canada’s headline retail sales are seen rising 0.3% month-over-month in October while core sales are expected to have risen by 0.4% on the month. Meanwhile the third quarter US GDP is not expected to be revised again having already been revised to 3.3% from 3.1% reported initially. As a result of the North American data dump this afternoon, we could see a sharp spike in volatility in the USD/CAD pair ahead of Canadian monthly GDP and US Core PCE Price Index and personal spending data tomorrow.
But will the data help move the Loonie out of a sticky range it has been trading inside for the past two months? As can be seen on the daily chart, below, the USD/CAD has been finding consist support around 1.2660/80 and resistance around the 1.2900/30 area, where we also have the 200-day moving average converge. While price is contained within this 220-270-pip range, it is difficult to have a directional bias in mind. So, one should treat this as a range-bound markets as it clearly doesn’t have the profile of a trending market. As such, traders may want to be nimble, certainly until at least price breaks out in one or the other direction. Within the abovementioned range, short-term resistance comes in at 1.2850 (old support) and support at 1.2750 (50-day moving average). The next potential levels to watch in the event of a breakout is at 1.3000 while a breakdown could see price head towards the next key support at 1.2590.
(Click on image to enlarge)
Source: eSignal and FOREX.com.
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