USD/CAD has been quite impressive with the non-volatile bullish momentum, leading the price towards 1.3500-50 resistance area. CAD has failed to regain momentum amid the recent economic reports. Thus, USD gained momentum on the back of upbeat reports.
Yesterday the US Federal Reserve increased the key interest rate to 2.50% as expected from the previous value of 2.25%. FED is currently quite hawkish about a pace of rate hikes for 2019 despite the pressures from President Trump and volatility. US Stock and Bonds hit rock bottom recently after the FED sognaled two rate hikes next year. Though FED is currently thinking of short-term impacts on the economy, most of investors as well as President Trump are concerned about too fast pace of monetary tigthening and its impact on businesses. FED signaled that the US economy will be a bit slow in 2019 while inflation is likely to be below 2 percent. In the policy statement, there are at least of 2 rate hikes on the agenda for 2019 which might lead the interest rate to 3.50%. Recently US Existing Home Sales report was published with an increase to 5.32M from the previous figure of 5.22M which was expected to decrease to 5.20M. Today Philly FED Manufacturing Index is going to be published which is expected to increase to 15.1 from the previous figure of 12.9, Unemployment Claims could have a negative result of increasing to 216k from the previous figure of 206k, and CB Leading Index is expected to decrease to 0.0% from the previous value of 0.1%. Moreover, tomorrow Final GDP report is going to be published which is expected to be unchanged at 3.5%.
On the CAD side, the loonie has been struggling amid the recent economic reports. Indeed, CPI decreased to -0.4% as expected from the previous positive value of 0.3%, Common CPI remained unchanged as expected at 1.9%, Median CPI decreased to 1.9% despite having expectation of unchanged value of 2.0%, and Trimmed CPI decreased to 1.9% which was expected to be unchanged at 2.1%. Canada has been quite silent with the fundamentals after the Trade War with the US. So Canada's downbeat economic data failed to arouse positive market sentiment. Tomorrow Canada's Core Retail Sales report is going to be published which is expected to increase to 0.2% from the previous value of 0.1%, GDP is expected to increase to 0.2% from the previous negative value of -0.1%, Retail Sales is expected to increase to 0.4% from the previous value of 0.2%, and BOC Business Outlook Survey is going to take place as well which is expected to provide the definite momentum for the CAD market for the coming days.
Meanwhile, certain volatility is expected to be seen in this pair for the coming days. USD is expected to show a mixed dynamic, but CAD is optimistic. If Canada manages to provide better than expected reports or is they meet expectations, bearish pressure is expected in the pair for the coming days.
Now let us look at the technical view. The price is currently non-volatile and impulsive with the bullish gains that is expected to lead towards 1.3550 resistance area. The price also formed Bearish Divergence which is expected to lead to certain bearish pressure off the resistance area. As the price remains below 1.3550 area, there are certain chances of short-term bearish intervention with a strong bullish counter-move in the coming days.
SUPPORT: 1.3350, 1.3450
RESISTANCE: 1.3550, 1.3650
BIAS: BULLISH
MOMENTUM: NON-VOLATILE and IMPULSIVE