Source: Economic Events March 22, 2019 - Admiral Markets' Forex Calendar
After the Fed rate decision last Wednesday, USD/CAD traders will be closely monitoring today's Canadian inflation data announcement.
Wednesday's Fed statement was very dovish, with the US central bank not predicting any coming rate hikes for 2019 anymore (this being down from the 2 - 3 predicted back in December 2018), and only one hike for 2020.
What's interesting, is that 10-year US yields collapsed to new yearly lows, and the US dollar is being offered on a broad front. And while the USD/CAD could stabilise soon, it's still trading above its long-term uptrend line.
The reason why the Loonie couldn't catch a bid against the Greenback, is that it seems like traders expect the BoC to take a similar approach to the Fed. This comes after disclosing at the last BoC meeting that it has an increased uncertainty of future rate increases due to a sharper Q4 economic slowdown than was projected, coupled with a weaker-than-expected Canadian economy thus far in 2019.
That said, and if today's Canadian inflation data disappoints like last month's reading (where Canadian inflation came in at 1.4% (YoY) against 2% expected), USD/CAD could take on fresh bullish momentum with an initial target around 1.3470 in the coming days, and a break higher levelling the path up to 1.3670/3700.
And even if data comes in as expected, and volatility in US equities picks up again in the days to come, another push towards 1.3080/3120 seems unlikely in our opinion, due to a tending positive correlation between USD/CAD and the VIX:
Source: Admiral Markets MT5 with MT5-SE Add-on GBP/USD Daily chart (between December 18, 2018, to March 21, 2019). Accessed: March 21, 2019, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2014, the value of the USD/CAD increased by 9.4%, in 2015, it increased by 19.1%, in 2016, it fell by 2.9%, in 2017, it fell by 6.4%, in 2018, it increased by 8.4%, meaning that after five years, it was up by 28.4%.
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