USD/CAD Tumbles To Four-Month Lows Under 1.3300 After US CPI

By Patricio Martín of FXStreet

Tuesday, June 13, 2023 1:08 PM EST

The USD/CAD turned south on Tuesday, falling below 1.3300 as the US Dollar weakened following the release of local inflation data. With data coming below expectations, markets are now fully pricing in a no-hike by the Federal Reserve (Fed) on Wednesday. On the Canadian side, no relevant economic data will be released on Tuesday. The Loonie is also benefiting from higher Oil prices and positive risk sentiment.

Markets diggest US CPI data ahead of Fed’s decision

The US Bureau of Labor Statistics’ Consumer Price Index (CPI) came below expectations in May. The headline inflation rate slightly decreased to 4% YoY versus the 4.1% expected and down from its previous figure of 4.9%. On the other hand, the Core inflation measure matched expectations easing to 5.3% YoY from the previous 5.5%. On a monthly basis, the CPI and the Core CPI rose 0.1% and 0.4%, respectively.

Following the data, the CME FedWatch Tool suggests that investors have practically fully priced in a no-hike for Wednesday’s Fed decision. Attention now shifts to the following meetings, so that investors will eye any clues regarding forward guidance in Chair Powell’s press conference, the updated macroeconomic forecasts and the dot plots from the Federal Open Market Committee (FOMC). As for now, the stronger case for July’s meeting is a 25 bps hike, whose odds slightly increased to 63%.

The US Dollar, measured by the DXY index, is trading 0.35% lower on the day following inflation numbers, retreating to the 103.30 area.

USD/CAD levels to watch

Based on the daily chart, the USD/CAD shows a bearish bias in the short term, as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest that the sellers are in control, while the pair trades below its main moving averages.

Upcoming resistance for USD/CAD is seen at the zone at 1.3350 level, followed by the 1.3380 area and the psychological mark at 1.3400. On the other hand, support levels are seen at the 1.3300 area, followed by April’s low at 1.3273 and the 1.3250 zone.

USD/CAD daily chart

(Click on image to enlarge)

More By This Author:

AUD/USD Price Analysis: Seems Poised To Test May Swing High, Around 0.6815-20 Zone
XAG/USD Hits A Four-week High But Retreats As Gravestone Doji Emerges
USD/JPY Price Analysis: Bounces Off Weekly Lows, Further Upside Above 140.00

Disclaimer: Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only ...

Disclaimer: Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

less

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.