Stronger than expected CPI lifted the greenback
USD/CAD surged and rebounded, breaking through short-term resistance. The 2-year yield rose to help to generate tailwinds for the greenback. Stronger than expected headline and core CPI spooked market participants.
Consumer prices surged higher, rising to a 40-year high, rising 8.6% yearly, hotter than the 8.3% expected. This report shows that headline inflation remains strong due to energy, food prices, and shelter. Excluding volatile food and energy prices, core CPI was up 6%, slightly higher than the 5.9% estimate. Monthly, headline CPI was up 1% while core rose 0.6.
The USD/CAD rebounded sharply. Target resistance is seen near the May highs at 1.3070. Support is seen near the 200-day moving average near 1.2660. The 10-day moving average crossed below the 50-day moving average, which means that a short-term downtrend is now in place.
Short-term momentum has reversed and turned positive as the fast stochastic had a crossover buy signal.
Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.
David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.