Global macro overview for 22/12/2017

Phenomenal data came from the Canadian economy. Retail sales increased to 1.5% on a monthly basis which was way better than 0.3% forecasts and the previous 0.1% value. The CPI inflation also surprised positively, which broke the consensus both on an annual and monthly basis by 1 pp. (respectively to 2.1% and 0.3%). If the inflation proves sustained, it will be definitely noted by the Bank of Canada. Policy makers have been keen to keep the expansion moving with low-interest rates while expecting a price pressure will be muted. Nevertheless, the hot Canadian economy has started to show the signs of inflationary pressures, so BoC might change its point of view regarding the interest rates policy very soon. Investors are anticipating the Bank of Canada will move ahead with three more interest rate increases by the end of next year, adding to two rate hikes this year.

Let's now take a look at the USD/CAD technical picture at the H4 time frame. The Canadian Dollar jumped as much as 0.9% so far as the reports raise the prospect of earlier rate increases by the central bank. The USD/CAD pair has violated the support at the level of 1.2713 and currently is moving sideways. The momentum indicator is now below its fifty level as points to the south. The next technical support is seen at the level of 1.2662.

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