(MENAFN- Daily Forex) The usd/cad has done very little during trading on Wednesday, as we are waiting for the CPI numbers to come out on Thursday. The Consumer Price Index is a major read on inflation, so it's not surprising that the market will be paying close attention to it. The federal reserve will have to keep an eye on inflationary pressures, so if the CPI number comes in hot, that will more likely than not send this pair higher. It is worth noting that the market is trying to build a bit of a base, right around the 1.34 level, an area that has been imported a couple of times.
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It's also worth noting that the 200-Day ema sits just below, so that could be another reason to think that this market may have a little bit of support underneath. I do think also that you must keep in mind that there is a correlation between the Canadian dollar and crude oil, which has been getting absolutely hammered as of late. After all, there are a lot of concerns around the world that the global demand for crude oil will continue to drop as central banks around the world tighten monetary policy. That in theory should drive down the use of crude oil globally.The Market Will Probably be Quite Mobile
On the other hand, if CPI comes in a little cooler, that will probably send this market lower, because Wall Street will try to run with it, and think suddenly that the Federal Reserve is going to reverse everything. It's a very reactionary market, and all of Wall Street is just sitting there waiting for loose monetary policy, which is not their fault, since the Federal Reserve has decided to prop up asset bubbles over the last 15 years instead of taking care of the actual economy.
At this point, any rally will probably have to deal with resistance at the 50-Day EMA, but that will probably be somewhat minor. If we truly take off in that direction, we probably will have the market try to take out the 1.37 level. Anything above 1.37 would be extraordinarily bullish, sending this market much higher at that point in time. Either way, this is a market that will probably be quite mobile tomorrow.
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