At 1.223 million, US construction permits failed to meet expectations: The prediction was 1.250 million. and petroleum product inventories also, naturally, affected the volatility of the pair. The dollar strengthened yesterday, locally breaking through 1.1700. For now, we are treating this movement as a technical correction, but building up longs is becoming dangerous, and it may be worth putting in some stops. Short term, the 21-day exponential moving average is being tested on the daily charts. Today the usual unemployment numbers may give support to the bears. A drop of 240,000 in the number of benefits claims compared to the previous number is predicted. The day will end with remarks by FOMC member Robert Kaplan, who, you will recall, was in a dovish mood at the last vote. We are not expecting any surprises, but short sellers may greet any hints of a tightening of monetary policy with delight and appreciation. Eurozone inflation data will also influence the currency market’s star pair today.
The Canadian dollar has been weakening against the greenback throughout August. Although Canada is ahead of the United States in a number of macroeconomic indicators, e.g., inflation and unemployment, it appears that traders are convinced that the BOC will not raise the rate this year, while they are still putting some hopes in the FOMC. As we noted at the beginning of the month, technically a V-shaped base with resistance at 1.2735 has formed. Among the news due out in Canada this week, financial market traders will be focusing on Friday’s CPI.
Nikolay Dudchenko, exclusively for Olymp Trade