CAD GAINS ON POSITIVE CPI AND RETAIL SALES DATA
The price of the EUR/USD is showing an increase in volatility due to the split stance of traders on the tax reform bill in the US. Tax inflows to the world’s largest economy may be reduced by 1.5 trillion dollars if the proposed tax cuts get approved by parliament and we may see the depreciation of the US dollar due to profit taking. Additional pressure on the US economy came from the news on GDP growth in the US of only 3.2% in the third quarter compared to the 3.3% forecasted. Slower than anticipated economic expansion may delay the Fed’s rate hikes planned for 2018 and that in turn will be negative for the greenback.
The NZD/USD demonstrates a confident ascending movement following yesterday’s release of the GDP report. New Zealand’s economy expanded by 0.6% in the third quarter against the last quarter which was in line with the forecast.
The UK pound is under pressure from political instability. The deputy of the British Prime Minister has resigned and that may influence the course of the current negotiations on the Brexit terms. At the same time, investors are waiting for important macro statistics from the UK on GDP growth and the current account balance tomorrow.
The USD/CAD has sharply fallen on the background of unexpectedly strong retail sales growth of 1.5% in October which is 1.2% better than expected. At the same time, the consumer price index in November has grown by 0.3% which is 0.1% better than the average prediction and 0.2% more than in the previous month. Strong inflation growth enables the Bank of Canada to raise interest rates in 2018.
The EUR/USD quotes have broken the SMA100 on the 15-minute chart and in case of continued declines may reach the closest support lines at 1.1825 and 1.1730. The growth potential is likely to be limited by the nearest resistance at 1.1925, breaking through this level may open the way for a further price increase to 1.2000.
The NZD/USD is rising within the limits of the sideways corridor 0.6950-0.7030. Gaining a foothold above 0.7030 may become the basis for continued price growth to 0.7200. The RSI on the 15-minute chart is near the overbought zone, which may be a sign of a descending price correction soon. In order to switch to the bearish trend, the quotes need to break through the support at 0.6950.
The USD/CAD has shown a powerful descending impulse caused by the macro data release in Canada. As a result, quotes have broken the important support at 1.2800 and the next targets in case of maintaining the current impulse will be at 1.2660 and 1.2600. After the sharp fall we do not eliminate the chance of an upward correction soon due to profit taking.