The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
The BOC cuts rate, leaves no hope for positive outlook
The outcome of today’s rate decision of the Bank of Canada was not too shocking after the rate cut by the Fed. Still, an announcement of a rate cut by 50 basis points instead of 25 basis points expected by the market was surprising. The shift from 1.75% to 1.25% was a reaction to the weaker outlook amid coronavirus threats.
How did the market react?
USD/CAD initially spiked above the 1.34 level after the release on H4, opening the way for bulls to the next key resistance at 1.3460. It’s worth mentioning that the trading of a pair has been very volatile within a day, as it has also tested the levels below the 1.3344 support.
CAD/JPY has fallen to the lowest levels since last October. On H4, the pair has tested the 79.95 level. The next support in the focus of bears lies at 79.82.
As for CAD/CHF, the pair has tested the lows of May 2017 at 0.7122. If it’s broken, the slide to the 2016 lows at 0.7060 will be expected. Upside momentum is limited by the 0.7207 level.
The central bank did not exclude the possibility to apply more measures if needed. On Thursday, it is recommended to follow the comments by the BOC Governor Stephen Poloz at 19.45 MT time. His speech may contain some details on further actions by the bank.
Let's not forget about the OPEC meeting tomorrow. The decision on oil output may also move the CAD, as it is commodity-linked currency.
The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
The Reserve Bank of Australia (RBA) will make a statement and release a Cash Rate on February 7, 05:30 GMT+2. It's among the primary tools the RBA uses to communicate with investors about monetary policy.
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.