- US CPI readings for May match market expectations.
- DXY edged lower to mid-93s post data.
- WTI stays quite near $66.
With the initial reaction to the inflation data releases from the United States, the USD/CAD pair lost around 20 pips to drop a couple of pips below the 1.30 handle. As of writing, the pair was trading at 1.2995 and still was up 0.12% on the day.
The monthly report published by the US Bureau of Labor Statistics on Tuesday showed that the consumer price index rose by 0.2% on a monthly basis in May and 2.8% on a yearly basis, the highest recording in nearly six years. The core-CPI, which doesn’t include the volatile food and energy prices, rose by 2.2% annually to match the market estimates.
Despite the upbeat inflation readings, however, the US Dollar Index retraced its small daily gains and turned negative mid-93s. At the moment, the index is at 93.53, losing 0.03%.
On the other hand, the barrel of WTI, which usually provides a directional clue to the commodity-sensitive loonie, is having a difficult time setting direction on Tuesday as it stays relatively flat slightly above $66.
Later in the day, the Financial Management Service of the US will be publishing the Monthly Budget Statement. However, ahead of tomorrow’s critical FOMC meeting, investors are likely to refrain from taking large positions.
Technical outlook
The pair could encounter the first technical support at 1.2935 (20-DMA) ahead of 1.2860 (50-DMA), and 1.2815 (may 31 low). On the upside, the immediate resistance now aligns at 1.3000 (psychological level), followed by 1.3040 (Jun. 8 high) and 1.3070 (Jun. 5 high).
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