Heads up, dollar traders! We’re about to see the Fed’s preferred inflation measure soon.
Could the core PCE price index be enough to keep the U.S. currency afloat?
Before moving on, ICYMI, yesterday’s watchlist checked out a small channel on EUR/USD ahead of the U.S. GDP release. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. economy contracted by 0.9% in Q2 vs. projected 0.4% expansionU.S. advanced GDP price index up from 8.2% to 8.7% vs. projected dip to 7.9%
U.S. President Biden unveils Inflation Reduction Act
U.S. Treasury Secretary Yellen assures economy remains resilient amid headwinds
Tokyo core CPI rose from 2.1% to 2.3% vs. 2.2% forecast
Japanese unemployment rate unchanged at 2.6% vs. expected improvement to 2.5%
Japan’s industrial production rebounded by 8.9% after previous 7.5% decline
Japanese retail sales grew 1.5% vs. estimated 2.8% gain, 3.7% previous
Australian producer prices rose 1.4% as expected, following earlier 1.6% increase
Japanese consumer confidence index slumped from 32.1 to 30.2 in July
French flash GDP printed 0.5% expansion in Q2 vs. estimated 0.2% uptick
German import prices rose by 1.0% as expected
Swiss retail sales recovered by 1.2% as expected, following earlier 1.3% slump
Swiss KOF economic barometer at 90.1 vs. 95.2 expected
Spanish flash CPI jumped from 10.2% to 10.8% vs. 10.6% forecast
Spanish flash GDP showed 1.1% expansion vs. projected 0.4% growth
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone flash CPI estimates at 9:00 pm GMT
Canadian GDP at 12:30 pm GMT
U.S. core PCE price index at 12:30 pm GMT
U.S. personal income and spending at 12:30 pm GMT
Chicago PMI at 1:45 pm GMT
U.S. UoM revised consumer sentiment index at 2:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: USD/CAD: 1-hour
It’s official! The U.S. economy is in a technical recession!
The U.S. advance GDP release put the dollar in selloff mode, as the report showed a 0.9% contraction instead of the expected 0.4% growth figure.
But can the Greenback get back on its feet today?The core PCE price index, which is rumored to be the Fed’s preferred inflation measure, is up for release and another strong uptick in inflation is eyed.
In particular, analysts are estimating a 0.5% gain in price levels, faster than the earlier 0.3% uptick. An even higher than expected figure could spur hopes of another big hike from the Fed soon.
USD/CAD is shaping up to be a good pair to trade if you’re hoping to catch a dollar bounce. The pair is closing in on the bottom of its ascending channel that’s been holding since May.
This potential support area is in line with the 61.8% Fibonacci retracement level plus the 1.2800 major psychological mark, making it a prime spot for buyers to hop in.
Of course the Canadian GDP release is also a catalyst that’s worth keeping tabs on, as the economy is eyeing a 0.2% contraction. Weaker than expected results could mean some downside for the Loonie.
Technical indicators are looking mixed at the moment, with the moving averages bracing for a bearish crossover and Stochastic pulling higher from the oversold region. I’m seeing a bit of bullish divergence with those higher lows, too.
If USD/CAD finds a floor at the channel bottom, the pair could make its way back up to the swing high or at least until the middle of the channel at 1.3000. Don’t miss it!