The dollar index slowed down as investors await the release of US inflation data. Wall Street economists forecast that the core CPI will remain at 4.8% year-on-year. At the same time, the consumer price index, which includes a broader list of goods, is expected to show an acceleration to 3.3%. The statistics will be published at 12:30 GMT. These figures could affect future decisions of the US Federal Reserve (Fed) on interest rates.
Market participants are pricing in an 86.5% probability that the Fed will leave interest rates unchanged at its September meeting. At the same time, US Treasury yields are expected to fall in the coming months, despite the lack of signs that the central bank is about to start cutting rates. In addition, 10-year bond yields are not expected to return to their cyclical highs, according to analysts polled by Reuters.
Meanwhile, China's consumer sector fell into deflation in July. The country is struggling to revive demand, so pressure mounted on Beijing to release more direct policy stimulus.
President Joe Biden on Wednesday signed an executive order that will prohibit some new US investment in China in new technologies. The move could fuel tensions between the world's two largest economies.
The dollar has benefited from safe-haven demand in the wake of a run of poor Chinese economic data and geopolitical instability.
At the end of the current week, the USDCAD pricing is dominated by the US dollar, as data release in Canada is not expected anytime soon.
The currency pair price is in a downward corrective channel on the D1 timeframe. The price rebounded from the descending resistance line. This confirms the strength of the channel that is being formed.
The moving of the Stochastic Oscillator (standard values) have moved out of the overbought zone, indicating a possible price decline.
Signal:
The short-term outlook for the USDCAD pair is to sell.
The target is at the level of 1.3110.
Part of the profit should be fixed near the level of 1.3270.
A Stop-loss should be placed at the level of 1.3600.
The bearish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
