- USD/CAD seems to ignore the US inflation report, which was higher than estimated.
- US Treasury yields rise, led by the 10-year Treasury bond yield at 2%.
- USD/CAD Technical Outlook: Neutral Bias Limited to 1.2650-1.2790 Range.
The USD/CAD trims Wednesday’s losses as January US inflation rises to a 40-year high as the US central bank prepares to start its tightening cycle. At the time of writing, the USD/CAD is trading at 1.2693.
On Thursday, the Labor Department reported that January inflation rose 7.5%, higher than the 7.3% estimated on an annual basis. Excluding volatile items such as energy and food, also called the Core Consumer Price Index (CPI), it exceeded the 6% level, higher than the 5.9% expected, the highest level since 1982.
market reaction
USD/CAD’s initial reaction was to the upside, rising from 1.2670 to 1.2714, although it stalled around the daily high of 9 Feb. Meanwhile, the 10-year US Treasury yield hit the 2% level in the bond market, rallying more than five basis points after the US inflation report.
An absent Canadian economic docket left USD/CAD traders adrift on US macroeconomic data on the US front, along with inflation figures, initial jobless claims for the The week ending February 5 rose 223,000, down from the 230,000 estimated by economists, while continuing jobless claims were unchanged at 1,621,000 compared to the previous week’s revision.
USD/CAD Price Forecast: Technical Outlook
USD/CAD is confined to the 1.2650-1.2790 area. The 50 day moving average (DMA) at 1.2703 above the spot price is resistance, limiting moves from Monday, while the 100 and 200 DMAs at 1.2616 and 1.2519 are almost “horizontal” well below the spot price. change.
That said, the first resistance for the USD/CAD would be the aforementioned 50 DMA. A break of the latter would expose the Jan 28 cycle high at 1.2796. Once it breaks, USD/CAD will have a clear path to Dec 2021 high at 1.2963.
Additional technical levels
Source: Fx Street
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