Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
Vladimir Zernov

USD/CAD Video 12.08.20.


U.S. Core Inflation Increases By 1.6%

USD/CAD tested the support level at 1.3235 as the U.S. dollar lost ground against a broad basket of currencies while WTI oil tested the resistance at $42.50.

The U.S. Dollar Index has settled below 93.50 amid continued uncertainty regarding the fate of the new U.S. coronavirus aid package.

U.S. Treasury Secretary Steven Mnuchin has indicated that Republicans and Democrats may fail to reach a deal. This will be an unpleasant scenario for the U.S. economy which heavily depends on consumer activity.

Meanwhile, the U.S. has reported Inflation Rate and Core Inflation Rate data for July. On a year-over-year basis, Inflation Rate increased by 1% while Core Inflation Rate increased by 1.6%.

Analysts expected that Inflation Rate would increase by 0.8% while Core Inflation Rate would increase by 1.1%.

The significant increase in U.S. inflation is a potential major catalyst for the markets. In case inflation reports in the next few months confirm the trend, traders may start thinking about their assumptions of permanently low rates.

The U.S. debt market has already reacted to the new data, and yields on U.S. government bonds are increasing.

At this point, the increase in U.S. government bond yields did not provide support to the U.S. dollar but the situation may quickly change in case yields continue to rise.

Technical Analysis

USD to CAD made an attempt to settle below the nearest support level at 1.3235 but this attempt was not successful. However, USD to CAD has decent chances to get below this level in case oil continues to rise or U.S. dollar loses more ground against a broad basket of currencies.

In this case, USD to CAD will gain more downside momentum and head towards the next support level at 1.3200.

On the upside, the nearest resistance level for USD to CAD is located at 1.3330. This resistance level has been tested during today’s trading session, and USD to CAD failed to settle above it.

In case the next test of this resistance level is more successful, USD to CAD will head towards the 20 EMA at 1.3380.

For a look at all of today’s economic events, check out our economic calendar.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.