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Analysis

CAD inflation: Fall in CPI expected

BY Janne Muta

|June 27, 2023

Today’s main risk event is the CAD inflation data release. The analyst consensus expectation is that the CPI will fall. A significant decline in the annual inflation rate is expected due to the high base effect from the increase in May last year. Note that both the median and trim y/y measures have been falling for five consecutive months. USDCAD has been trending lower since double topping in May. Heads up for the US CB consumer confidence data!

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In yesterday’s trading, Nasdaq continued lower while DJ and DAX lost some of the recent downside momentum, suggesting the selling pressure could be easing. DAX was trading relatively close to a major support level which explains the renewed interest from the bulls. DJ however has some technical hurdles ahead before the market can turn around.

Looking at the US equity markets at the sector level it has been the real estate, energy, and materials sectors that have performed well. They’ve been supported by lower interest rates and gains in commodity prices. Consumer discretionary and technology sectors have also been strong performers in the past month, driven by optimism about the economy and the rally in mega-cap tech stocks. Utilities have been underperforming indicating investors don’t believe they need the relative protection from the dividend stocks.

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USDCAD

USDCAD is bearish below 1.3226 and could trade down to 1.3060. Above 1.3226, look for a move to 1.3250.

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DAX

DAX broke out of a bearish trend channel and could be turning bullish. Above 15 915, look for a move to 16 000 and then possibly to 16 180. Below 15 915, we might see the market trading to levels near yesterday’s low (15 710).

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Gold

XAUUSD remains bearish below 1937. Above the level, gold could trade to 1950. Below 1937, look for a move to 1887.

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USOIL

USOIL is bullish above 68.75 and could trade higher to 70.85. Below 68.75, look for a move to 68.10.

The Next Main Risk Events

  • EUR ECB President Lagarde Speaks
  • CAD CPI
  • USD Core Durable Goods Orders m/m
  • USD Durable Goods Orders m/m
  • USD CB Consumer Confidence
  • USD New Home Sales
  • USD Richmond Manufacturing Index
  • AUD CPI y/y
  • EUR ECB President Lagarde Speaks
  • GBP BOE Gov Bailey Speaks
  • JPY BOJ Gov Ueda Speaks
  • USD Fed Chair Powell Speaks
  • EUR ECB President Lagarde Speaks

For more information and details see the TIOmarkets economic calendar.


Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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