Canadian dollar falls ahead of BOC decision
The Australian dollar declined sharply after the country’s statistics office released the inflation numbers for the first quarter. In the quarter, the headline CPI rose at an annualized rate of 1.3%, which was higher than the expected 1.5%. In the fourth quarter, the CPI had risen by 1.8%. On a QoQ basis, the CPI was unchanged. The trimmed mean CPI rose by an annualized rate of 1.6%, which was lower than the expected 1.7%, while the weighted mean CPI rose by 1.2%. The disappointing CPI came a week after the country’s central bank said it would be forced to cut rates if the economy continues to show weakness.
The Euro declined against the USD after Germany released the business climate survey numbers. According to ifo, the business climate declined to 99.2, from the previous 99.6. The market was expecting the data to move to 99.9. The current assessment declined to 103.3 from the previous 103.9 while the business expectations declined to 95.2 from the previous 95.6. These numbers continue to show the challenging situation that the European economy is in.
The Canadian dollar declined against the USD ahead of the important interest rates decision by the Bank of Canada. The bank is expected to leave rates unchanged at 1.75%. This will be the fourth consecutive month that the bank has not raised rates. Investors also expect the bank to announce that it was pausing more interest rates hikes. The Canadian economy faces several challenges such as the reduction of manufacturing activity and retail sales. Also, Canadians have the biggest household debt among the G7 countries.
In the United States, stock paused today ahead of key earnings by companies like Facebook and Microsoft. Ahead of the market open, Boeing released disappointing earnings. The company also suspended its guidance and said it was pausing share buybacks as the 737-max crisis continue. Caterpillar’s stock rose in premarket trading after its earnings and revenues beat the consensus estimates. Other companies that rose were Snap, Dominos, and Anadarko. In total, 42 companies in the S&P 500 will report today.
The EUR/USD pair declined to an intraday low of 1.1193. On the four-hour chart, the pair is below the 50-day and 25-day moving averages. It is also along the important support shown below. The RSI has remained relatively unchanged at the oversold level while the Parabolic SAR dots remained above the price. The pair will likely continue moving lower to test the immediate support of 1.1180.
The USD/CAD continued the upward trend started on April 19, when the pair was trading at 1.3273. Today, it reached a high of 1.3460, ahead of the BOC decision. The volumes and the accumulation/distribution indicators have all cooled down ahead of the decision. Also, the pair’s price is slightly above the 25-day and 50-day moving averages. While the pair could move upwards after the BOC decision, there is also a likelihood that it will move lower to test the 25-day moving averages of 1.3390.
The AUD/USD pair declined sharply after weak inflation numbers. The pair reached an intraday low of 0.7027, which was the lowest level since March 8. On the four-hour chart, this price is along the lower line of the Bollinger Bands while the RSI has dropped to below the 25 level. The pair will likely continue to drop to test the important support level of 0.7000.