Yesterday, Canada’s GDP grew by 6.7% year-on-year in the fourth quarter. That was faster than expected. Inflation is also much higher than the target rate at 5.1% year-on-year. Moreover, the last report was much stronger than the 4.8% expected. All of this shows a 0.25% increase to 0.50% from the Bank of Canada today. They will announce a decision at 10 AM ET.
Technically, the USDCAD moved higher yesterday in reaction to the USD buy, but stopped just near its 100-hour moving average (blue line in the chart above).
Today, both the 100 and 200 hour moving averages converge at 1.27403. The high price in the morning session of London stalled before the 100-hour MA again, and moved lower.
The pair later hit a new low for the day at 1.2683. That was just above last Wednesday’s low of 1.26806.
A move below that level today, and traders will later target the low of a long consolidation range returning to January 26 between 1.2649 and 1.26566 (see lowering of the red box in the chart above).
Admittedly, there was a brief break below that level back on February 10, but the break was quickly reversed and the price turned back to the upper end. The low price on the day reached 1.26344. It would be a target for increased sales pressure today.
Taking a broader look at the consolidation, the price remained mostly between 1.26496 and 1.27956 (see red box in the chart above). Last week, the price extended above the higher end en route to a high price of 1.28766. However, those gains were quickly eliminated. On Friday and again on Monday the price tried to extend above the upper end, only to fail in every attempt.
Technically, holding against the 100-hour moving average – both yesterday and today – is a bearish “story” of the market. It would take a move above those moving averages to tilt the bias back towards the buyers. Without that, and breaking out of the red box to the downside, and then below the 100-day moving average at 1.2638, and the February 10 low at 1.26344 would increase the bearish bias.
It could be a big move because the price has been limited in a narrow range for such a long time. Be aware