USD/CAD Awaits Canada’s CPI and Fed Decision, Oil Price Trimming Gains18 September, 2019 by Aayush Jindal in Market Analysis
- The US Dollar climbed higher recently above 1.3200 against the Canadian Dollar.
- Oil prices surged higher this week after weekend’s attack on Saudi Arabia’s massive oil facility.
- The US Industrial Production increased 0.6% in August 2019 (MoM), more than the +0.2% forecast.
- Canada’s CPI could decline 0.1% in August 2019 (MoM), whereas it increased last month by 0.5%.
USD/CAD Technical Analysis
Earlier this month, the US Dollar declined sharply below the 1.3250 support against the Canadian Dollar. The USD/CAD pair traded as low as 1.3133 and recently started a solid upward move above 1.3200.
Looking at the 4-hours chart, the pair surpassed many hurdles near 1.3190 and 1.3200 to move back into a positive zone. Moreover, there was a break above a connecting bearish trend line with resistance near 1.3215.
The pair even spiked above the 50% Fib retracement level of the last major decline from the 1.3382 high to 1.3133 low, and the 100 simple moving average (red, 4-hours).
On the upside, the next key resistance is near the 1.3300 and 1.3330 levels. Additionally, the 76.4% Fib retracement level of the last major decline from the 1.3382 high to 1.3133 low is near the 1.3320 level.
Therefore, the pair is likely to face a strong resistance near the 1.3300 area. If there is a convincing break above 1.3330, the pair could climb towards 1.3400 in the coming days.
Conversely, the pair could correct lower and test the 1.3220 support area. If the pair continues to decline, it could revisit the 1.3150 support area. The next move depends on today’s important releases, including Canada’s CPI report and the Fed interest rate decision.
Fundamentally, the US Industrial Production report for August 2019 was released by the Board of Governors of the Federal Reserve. The market was looking for a 0.2% rise in the production compared with the previous month.
The actual result was better than the forecast, as the US Industrial Production edged up 0.6% in August 2019. Moreover, the last reading was revised up from -0.2% to -0.1%.
The report added:
Manufacturing production increased 0.5 percent, more than reversing its decrease in July. Factory output has increased 0.2 percent per month over the past four months.
Overall, USD/CAD could continue to rise towards 1.3300-1.3330 or it might start a fresh decline back towards 1.3200. Additionally, the recent sharp rise in crude oil price might also impact USD/CAD. XTI/USD jumped more than 10% in the past few sessions after last weekend’s attack on Saudi Arabia’s massive oil facility. The price surged above $63.00 and it recently corrected lower below $62.00.
Upcoming Economic Releases
- UK Consumer Price Index August 2019 (YoY) – Forecast +1.9%, versus +2.1% previous.
- UK Core Consumer Price Index August 2019 (YoY) – Forecast +1.8%, versus +1.9% previous.
- Euro Zone CPI for August 2019 (YoY) – Forecast +1.0%, versus +1.0% previous.
- Euro Zone CPI for August 2019 (MoM) – Forecast +0.2%, versus -0.5% previous.
- Euro Zone Core CPI for August 2019 (YoY) – Forecast +0.9%, versus +0.9% previous.
- US Housing Starts August 2019 (MoM) – Forecast 1.250M, versus 1.191M previous.
- US Building Permits August 2019 (MoM) – Forecast 1.300M, versus 1.336M previous.
- Fed Interest Rate Decision – Forecast 2.00%, versus 2.25% previous.
- Canadian Consumer Price Index August 2019 (MoM) – Forecast -0.1%, versus +0.5% previous.
- Canadian Consumer Price Index August 2019 (YoY) – Forecast +2.0%, versus +2.0% previous.