All eyes on US inflation data, plus Canada's interest rate decision

Today’s Economic Events

Today’s asset focus

• USD/CAD in focus because of US inflation data plus Canada’s interest rate policy due
• Gold because of the US inflation report
• WTI crude oil because of the weekly inventories report

Market talk:

Today’s main events

• 12:30 PM UTC US inflation data due

• US core inflation is expected to remain elevated
• Sticky inflation for services i.e. higher cost for services
• Rents expected to slow (slightly)
• Food prices could show signs of slowing
• Used car prices expected to drop slightly
• Airfare prices could surprise towards the upside

Bottom line: The last few consumer price releases (CPI / inflation) saw high price action across USD assets, and high price action today should also be expected upon the release of today's US inflation data.

2:00 PM UTC: Bank of Canada (BoC) expected to hold rate at 4.5

• Canada’s lower economic growth outlook helping to push back on higher inflation prospects, so the expected NO change in interest rate policy today could remain the policy for the next few months

How has the Canadian dollar (CAD) been performing?

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Tactical Trading Ideas & Commentary

USD/CAD downside pressure remains, but a “corrective” move higher can’t be ruled out

Current price 1.3454 with resistance spotted near the 1.3560s. Traders should be alert for the prospect that price could move higher from current price but such a move could be a short term “corrective” move to test the 1.3560s resistance before resuming the prevailing multi-month down trend. Downside prospects in the very short term (5-13 days) seen near the 1.34 round number, while the 1.3560s could be hit before the lower number is hit.

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Gold: uptrend appears to be holding

Current price conditions remain in an uptrend (daily chart). Price has cleared above the key $2K round number opening up the prospects for price to continue last week's advance, which could see a further advance in the short term (14-25 days) for a retest of the recent highs near $2,034 and even $2,070 in extension. Downside risk spotted near $1,935.

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WTI crude oil could break higher

Current price has been attacking the $81.7 resistance (see chart 3), a break above the $81.70s could trigger a bullish price extension towards the $83s and the $87.50s further out. Downside risk seen below $75.70.