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USD/CAD
Negative trend in the US labor market intensifies
Negative trend in the US labor market intensifies
Current trend
The Canadian currency continues to resist the growth of the US dollar quite successfully, and USD/CAD has been relatively neutral throughout the current trading week. The instrument demonstrates local lateral dynamics against the background of the publication of economic statistics from Canada and is located in the area of 1.2522.
The key inflation indicator, the Consumer Price Index, remained at the level of 4.8% in December, having fallen by 0.1% compared to the November indicator; however, the Core CPI showed an increase to 4.0% in annual terms, which reflects high net consumer demand within the country, signaling the active pace of economic recovery in this direction. Statistics on the volume of Wholesale Sales also turned out to be positive: the indicator increased by 3.5% against the forecast of 2.7%. In general, one can already observe a slowdown in inflation, which indicates the effectiveness of the actions of the Bank of Canada in the field of monetary policy.
American investors expect decisive action from the US Federal Reserve as well, as annual inflation in the country has reached its highest level in almost 40 years, but many experts doubt that the tightening of monetary policy will have a positive impact, given the maximum amount of economic stimulus introduced by the authorities during the pandemic. In addition, since the beginning of the year, a negative trend has been observed in the national labor market, where an increase in jobless claims is observed. Initial Jobless Claims rose to 286K from 231K a week earlier, according to data yesterday, beating economists' expectations of 220K. Continuing Jobless Claims increased to 1.635M, well above last week's 1.551M and putting quite a bit of pressure on the US dollar.
The Canadian currency continues to resist the growth of the US dollar quite successfully, and USD/CAD has been relatively neutral throughout the current trading week. The instrument demonstrates local lateral dynamics against the background of the publication of economic statistics from Canada and is located in the area of 1.2522.
The key inflation indicator, the Consumer Price Index, remained at the level of 4.8% in December, having fallen by 0.1% compared to the November indicator; however, the Core CPI showed an increase to 4.0% in annual terms, which reflects high net consumer demand within the country, signaling the active pace of economic recovery in this direction. Statistics on the volume of Wholesale Sales also turned out to be positive: the indicator increased by 3.5% against the forecast of 2.7%. In general, one can already observe a slowdown in inflation, which indicates the effectiveness of the actions of the Bank of Canada in the field of monetary policy.
American investors expect decisive action from the US Federal Reserve as well, as annual inflation in the country has reached its highest level in almost 40 years, but many experts doubt that the tightening of monetary policy will have a positive impact, given the maximum amount of economic stimulus introduced by the authorities during the pandemic. In addition, since the beginning of the year, a negative trend has been observed in the national labor market, where an increase in jobless claims is observed. Initial Jobless Claims rose to 286K from 231K a week earlier, according to data yesterday, beating economists' expectations of 220K. Continuing Jobless Claims increased to 1.635M, well above last week's 1.551M and putting quite a bit of pressure on the US dollar.
Support and resistance
On the global chart of the asset, the price has finished working out the Head and Shoulders pattern and is ready to fix it with a reverse retest of the Neckline. Technical indicators are in a global sell signal state: the EMA fluctuation range on the Alligator indicator is still quite wide, and the AO oscillator histogram is forming up bars, hinting at a possible correction.
Support levels: 1.2467, 1.2315.
Resistance levels: 1.2556, 1.2637.
On the global chart of the asset, the price has finished working out the Head and Shoulders pattern and is ready to fix it with a reverse retest of the Neckline. Technical indicators are in a global sell signal state: the EMA fluctuation range on the Alligator indicator is still quite wide, and the AO oscillator histogram is forming up bars, hinting at a possible correction.
Support levels: 1.2467, 1.2315.
Resistance levels: 1.2556, 1.2637.