Market Analysis: After the Fed announcement, the Canadian CPI in focus – is volatility coming for the USD/CAD?

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  • 23.03.2019
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<p><a href=””><img style=”width:auto;” class=”img-responsive” src=”” alt=”CAD Economic Events” rel=”” style=””></a></p><p><em>Source: Economic Events March 22, 2019 – </em><a href=””><em>Admiral Markets’ Forex Calendar</em></a></p>
<p>After the Fed rate decision last Wednesday, USD/CAD traders will be closely monitoring today’s Canadian inflation data announcement.</p><p>Wednesday’s Fed statement was very dovish, with the US central bank not predicting any coming rate hikes for 2019 anymore (this being down from the 2 – 3 predicted back in December 2018), and only one hike for 2020. </p><p>What’s interesting, is that 10-year US yields collapsed to new yearly lows, and the US dollar is being offered on a broad front. And while the USD/CAD could stabilise soon, it’s still trading above its long-term uptrend line. </p><p>The reason why the Loonie couldn’t catch a bid against the Greenback, is that it seems like traders expect the BoC to take a similar approach to the Fed. This comes after disclosing at the last BoC meeting that it has an increased uncertainty of future rate increases due to a sharper Q4 economic slowdown than was projected, coupled with a weaker-than-expected Canadian economy thus far in 2019.</p><p>That said, and if today’s Canadian inflation data disappoints like last month’s reading (where Canadian inflation came in at 1.4% (YoY) against 2% expected), USD/CAD could take on fresh bullish momentum with an initial target around 1.3470 in the coming days, and a break higher levelling the path up to 1.3670/3700. </p><p>And even if data comes in as expected, and volatility in US equities picks up again in the days to come, another push towards 1.3080/3120 seems unlikely in our opinion, due to a tending positive correlation between USD/CAD and the VIX: </p>
<p><a href=””><img style=”width:auto;” class=”img-responsive” src=”” alt=”GBP/USD Daily Chart” rel=”” style=””></a></p><p><em>Source: Admiral Markets </em><a href=”″><em>MT5</em></a><em> with </em><a href=””><em>MT5-SE Add-on</em></a><em> GBP/USD Daily chart (between December 18, 2018, to March 21, 2019). Accessed: March 21, 2019, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.</em></p><p>In 2014, the value of the USD/CAD increased by 9.4%, in 2015, it increased by 19.1%, in 2016, it fell by 2.9%, in 2017, it fell by 6.4%, in 2018, it increased by 8.4%, meaning that after five years, it was up by 28.4%.</p><p><a href=”″><a href=””><img style=”width:auto;” class=”img-responsive” src=”” alt=”Download MetaTrader 5, and begin trading today!” rel=”” style=””></a></a></p><p><em>Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter “Analysis”) published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:</em></p><ol><li>This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.</li><li>Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.</li><li>Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter “Author”) based on the Author’s personal estimations. </li><li>To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.</li><li>Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.</li><li>The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.</li><li>Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.</li><li>The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.</li></ol><em>Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the </em><a href=””><em>risks</em></a><em>.</em>