USD/CAD forming a double bottom after the poor US data

Everything is going against USD/CAD. The big mover of the week came from Ottawa. The Bank of Canada not only raised rates but also made hawkish sounds[1]. They are set to hike rates again this year, based on upgraded forecasts.

The dollar side is also making its contribution. The troubles of Trump Junior[2] were joined by Janet Yellen’s nod to lower inflation[3].

And weak inflation is indeed the name of the game. Both core and headline inflation numbers missed on a monthly basis. Year over year, core CPI remained at 1.7% and headline CPI dropped. In addition, retail sales dropped by every measure, headline, core, and core of the core. A miss on US consumer confidence added fuel to the fire[4].

The US dollar dropped[5] and the loonie was there to benefit. USD/CAD reached a bottom of 1.2680 and bounced all the way back up to 1.2771. From there, the pair slid a bit lower before the data came out.

And those poor US figures pushed the pair to challenge the lows. The low is 1.2684, just 4 pips shy of the previous 13-month low.

Double bottom at 1.2680

So, this can be seen as a double-bottom, making 1.2680 a tougher nut to crack.

While the wider trend is clear and can continue running, the pair may be oversold at this point in time.

More: USD/CAD: What’s The Post-BoC Trade?[6] – Nomura

Get the 5 most predictable currency pairs[7]

from Forex Crunch

from Online Forex Trading Resource
View thesource article here


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