Day four: potential USD/CAD trade

USD/CAD hit a high of 1.0794 after the Bank of Canada gave a fairly cautious stance on inflation.

Source: Bloomberg

As expected, the bank detailed that the recent spike in prices was mainly attributable to the temporary effects of higher energy prices.

There were very little clues in the narrative that the bank will change tact and portray a more neutral stance on its interest setting.

Technically there are some concerning signs with stochastic momentum starting to turn lower, however it hasn’t given a significant bearish signal as yet. The overnight high was also the exact 50% retracement of the recent rally.

I continue to hold a bullish bias on USD/CAD, with traders looking out for building permits, housing starts and weekly jobless claims as a potential driver in upcoming trade.

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