23 Aug 2013
USD/CAD looks toppy
FXstreet.com (Barcelona) - USD/CAD will be a pair in focus today with the Consumer Price Index for the Canadian economy and New Home Sales for the US.
Alvin Pontoh, Asia-Pacific Macro Strategist, FX & Rates Strategy at TD Securities said with the combination of disinflationary seasonal factors and a subdued month for non-core energy prices, they’re looking for a modest +0.1% MM increase in the all-items CPI in July (mkt +0.2% M/M). “On a year-ago basis, that would push CPI 0.1ppt higher to 1.3% (mkt 1.4%). We’re also looking for core CPI to rise by +0.1% M/M (in line with consensus), balancing higher electricity and clothing prices with another month of falling auto prices. A positive base effect is also expected to have lifted year-ago core inflation to 1.6% in July (mkt 1.4%)”. He said this would mark the second consecutive monthly acceleration in the core measure and the highest rate since August 2012. “While we remain of the view that core inflation has carved out a cyclical trough through the first half of the year, a sluggish growth trajectory over 2013H2 will prevent a rapid ascent”. He continued to and said though in early days, Q3 core inflation is tracking at 1.4%, only a tenth of a percentage point above what was presented in the Bank of Canada’s July Monetary Policy Report (MPR). “Core inflation is not expected to converge to the Bank’s 2.0% target until well into 2014, which will help keep the overnight rate firmly on hold at 1.00%”. For the US data, he said they’re looking for new home sales to fall by -2.8% M/M in July (mkt -2.0%), giving back some of the big 8.3% increase from the month before.
USD/CAD is trading with a positive bias
USD/CAD is trading with a positive bias, however RSI is moving into over bought territory. The 20 DMA is 1.0361, the 50 DMA is 1.0393 and the 200 DMA is 1.0165. RSI (9) reads 70.24 while supports are ascending from 1.0337, 1.0370, 1.0390 and 1.0445. Spot is currently 1.0547 and resistances are 1.0578 1.0609, 1.0658 and 1.0674.
Alvin Pontoh, Asia-Pacific Macro Strategist, FX & Rates Strategy at TD Securities said with the combination of disinflationary seasonal factors and a subdued month for non-core energy prices, they’re looking for a modest +0.1% MM increase in the all-items CPI in July (mkt +0.2% M/M). “On a year-ago basis, that would push CPI 0.1ppt higher to 1.3% (mkt 1.4%). We’re also looking for core CPI to rise by +0.1% M/M (in line with consensus), balancing higher electricity and clothing prices with another month of falling auto prices. A positive base effect is also expected to have lifted year-ago core inflation to 1.6% in July (mkt 1.4%)”. He said this would mark the second consecutive monthly acceleration in the core measure and the highest rate since August 2012. “While we remain of the view that core inflation has carved out a cyclical trough through the first half of the year, a sluggish growth trajectory over 2013H2 will prevent a rapid ascent”. He continued to and said though in early days, Q3 core inflation is tracking at 1.4%, only a tenth of a percentage point above what was presented in the Bank of Canada’s July Monetary Policy Report (MPR). “Core inflation is not expected to converge to the Bank’s 2.0% target until well into 2014, which will help keep the overnight rate firmly on hold at 1.00%”. For the US data, he said they’re looking for new home sales to fall by -2.8% M/M in July (mkt -2.0%), giving back some of the big 8.3% increase from the month before.
USD/CAD is trading with a positive bias
USD/CAD is trading with a positive bias, however RSI is moving into over bought territory. The 20 DMA is 1.0361, the 50 DMA is 1.0393 and the 200 DMA is 1.0165. RSI (9) reads 70.24 while supports are ascending from 1.0337, 1.0370, 1.0390 and 1.0445. Spot is currently 1.0547 and resistances are 1.0578 1.0609, 1.0658 and 1.0674.