An interesting view of the recent downtrend in the Dollar (specifically highlighted on USD/CAD) is that with each subsequent rise in Fed rate expectations, the Dollar has seen further weakness.
The Fed funds futures were showing a 25% chance of a hike on March 24, as the banking crisis swept the headlines. A week later futures were signalling a 58% chance, which rose to almost 70% after the employment data on April 7. Today they are showing an 85% chance of a rate hike, yet the weakness continues.
The 2 hour chart highlights this well with the longer downtrend line starting on March 24th, when sentiment was at it lowest. Since then we've seen a 5 day up move that failed after a bullish pop on Bank Holiday Monday, followed by a 2 day up move that looks to be breaking today as we once again look to be failing on a micro trend line.
Today however we do get CAD CPI which is the other side of the equation, expectation is for 0.6% on a previous of 0.4% which did result in an 85 Pip move to the upside. The last time CAD CPI was higher than expected was on Dec 21st, so I think the possibility of a lower figure is high as the Canadian economy continues to handle inflation well.
From a technical perspective CAD1.3400 area corresponds to the 38.2% retracement of last week's decline and houses the 200-day day moving average.
The Fed funds futures were showing a 25% chance of a hike on March 24, as the banking crisis swept the headlines. A week later futures were signalling a 58% chance, which rose to almost 70% after the employment data on April 7. Today they are showing an 85% chance of a rate hike, yet the weakness continues.
The 2 hour chart highlights this well with the longer downtrend line starting on March 24th, when sentiment was at it lowest. Since then we've seen a 5 day up move that failed after a bullish pop on Bank Holiday Monday, followed by a 2 day up move that looks to be breaking today as we once again look to be failing on a micro trend line.
Today however we do get CAD CPI which is the other side of the equation, expectation is for 0.6% on a previous of 0.4% which did result in an 85 Pip move to the upside. The last time CAD CPI was higher than expected was on Dec 21st, so I think the possibility of a lower figure is high as the Canadian economy continues to handle inflation well.
From a technical perspective CAD1.3400 area corresponds to the 38.2% retracement of last week's decline and houses the 200-day day moving average.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.