Economists anticipate one other slowdown in inflation within the US: the final annual shopper worth index CPI from 4.0% to three.1%, and the bottom (Core CPI) – as much as 5.0% from 5.3% a month earlier. Many economists imagine that by the top of the 12 months or initially of the following, the Fed will fully transfer on to easing financial coverage.

If the US inflation knowledge nonetheless seems to be stronger than the forecast values, and particularly greater than the earlier ones, then we must always anticipate a severe rebound and a stronger greenback.

Conversely, affirmation of the forecast and weaker values of CPI and Core CPI than forecast will trigger additional weakening.

Particularly strongly (after the publication of inflation knowledge from the US) volatility will rise once more at 14:00 (GMT), when the Central Financial institution of Canada will publish its resolution on the rate of interest.

Economists are positive that the Financial institution of Canada will increase the rate of interest as we speak by 0.25% to five.00% amid fears concerning the resumption of progress in shopper inflation, though, in June, it, opposite to forecasts, decreased.

Market individuals are nonetheless not 100% positive concerning the actuality of as we speak’s rate of interest hike by the Financial institution of Canada, given the clear pattern in direction of a slowdown in inflation, and much more so that they have no idea what is going to occur subsequent.

If the Financial institution of Canada takes a pause in rate of interest hikes as we speak and makes obscure statements concerning the prospects for its financial coverage, confining itself to asserting its dedication to cost stability, then we must always anticipate a big weakening of the Canadian greenback.

For the time being, USD/CAD has reached 1.3220. In case of an extra decline and a breakdown of the important thing help stage 1.3080, we will discuss concerning the transition of USD/CAD to the zone of a long-term bear market as nicely (for extra particulars and an alternate situation, see USD/CAD: dynamics eventualities for 07/12/2023).

Nonetheless, the vector of dynamics of the USD/CAD pair might reverse once more if, following the outcomes of the July conferences, the Fed’s rate of interest is raised, and the rate of interest of the Financial institution of Canada stays on the identical stage.

The sign for brand new gross sales is a breakdown of the native and intraday lows at 1.3200.

In an alternate situation, and after the breakdown of the essential short-term resistance stage of 1.3262, USD/CAD will resume progress in direction of the important thing medium-term resistance ranges of 1.3345, 1.3380, 1.3410. The breakdown of the resistance stage at 1.3450 (Fibonacci 23.6% correction within the earlier wave of progress from the extent of 0.9700 to the extent of 1.4600, reached in January 2016) will once more carry USD/CAD into the medium-term bull market zone and resume the optimistic dynamics of the pair inside the long-term and international bull market markets.

Assist ranges: 1.3200, 1.3140, 1.3100, 1.3080, 1.3000, 1.2740, 1.2650

Resistance ranges: 1.3262, 1.3315, 1.3345, 1.3380, 1.3410, 1.3450, 1.3600, 1.3665, 1.3700, 1.3810, 1.3860, 1.3900, 1.3970, 1.4000

*) see additionally