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Loonie in Focus
The Loonie will be in focus today with the latest monthly Canadian CPI data due this afternoon. CAD has been weaker over the last 24 hours in response to a surge in expectations that Trump will become president again in November following his attempted assassination over the weekend. Many players forecast a higher likelihood of a Trump presidency on the back of this event leading to a revival of the so-called Trump trade.
Trump Impact
Given the high likelihood of a return to the protectionist policies used by Trump in his last term, we’re seeing commodity currencies under pressure this week. If expectations of a Trump win grow stronger in coming weeks and months, this is likely to weigh more heavily on CAD, offsetting the otherwise bullish impact of dovish Fed expectations.
CAD CPI On Watch
In terms of today’s CAD CPI data, traders will be watching to see if CPI returned to a downwards path following an unexpected uptick over the prior month. The BOC was the first of the G10 central banks to cut during this cycle and has pointed to further expected cuts. However, if inflation starts to move higher here, this could well postpone these plans for now, strengthening CAD. If, however, we see a downside surprise today, the combination of the Trump effect and dovish BOC expectations should keep USDCAD supported near-term.
Technical Views
USDCAD
The air has been trading recently in a congested block of price action between support at 1.2587 and resistance at 1.3866 with a local bear trend line adding pressure also. Momentum studies have flattened out, highlighting plenty of two-way risk here. If we break lower, 1.3377 will be key support to watch. To the topside, a break of 1.3866 will put focus on the 2023 highs around 1.3976.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.