Forex Signals Brief Feb 20: Canada CPI Expected to Resume the Decline

Yesterday markets were very quiet, with the economic calendar being empty and the US being in observance of Presidents Day, which meant that it was a bank holiday. Consequently, the US stock, bond, and commodity markets remained closed for the day. In the FX market, the price movement was slow, with most assets trading in a tight range due to limited liquidity in the absence of US market participants.

NZD/USD experienced the most significant movement among USD pairs, rising approximately 0.50%. Most of the action happened during the Asian Pacific session, with markets slowing down afterward. Other currency pairs in relation to the USD saw movements of 0.2% or less. Overall, major currencies ended the day lower relative to the NZD, with the CHF being the weakest performer.

The day starts with the LPR (Loan Prime Rate) rates which are expected to remain at 3.45% for the first year and 4.20% for the fifth year, according to the People’s Bank of China (PBoC). On Sunday, the PBoC decided to maintain the rate at 2.50%, with the MLF (Medium-term Lending Facility) decision typically preceding the LPR move. Following the central bank’s surprise decision to lower the RRR (Reserve Requirement Ratio) by 50 basis points instead of the expected 25 basis points, a rate cut at this stage is highly unlikely. If the market had been anticipating such a move, Monday could see disappointment setting in.

The Reserve Bank of Australia (RBA) will release the minutes of its meeting on February 6th, during which it kept interest rates unchanged at 4.35% and reiterated its commitment to tackling inflation. The board maintained its stance that another rate hike remains a possibility. Despite acknowledging a decrease in inflation during the December quarter, the RBA emphasized that inflation remains elevated at 4.1%. The primary objective of the board remains to bring inflation back to the target level within a reasonable timeframe.

The highlight of the day will be the CPI inflation report from Canada, with the month-on-month (M/M) measure expected at 0.4%, compared to the previous -0.3%. The year-on-year (Y/Y) Canadian CPI is expected to be 3.2%, down from 3.4% previously. The Bank of Canada (BoC) is closely monitoring the common, median, and trimmed mean indicators, which represent underlying inflation trends. While these indicators are approaching the BoC’s target range of 1-3%, the central bank remains cautious and seeks further improvements in wage growth and inflation. It’s worth noting that the underlying statistics in the last inflation report showed a reversal and recorded an increase.

Ethereum’s price has been on a steady upward trajectory since experiencing a decline in January that brought it close to $2,000. Our decision to initiate a buy signal for ETH at that level proved to be successful, as buyers reentered the market. They have managed to push the price above $2,800 this week, triggering the take profit for our trade. However, the price retraced slightly on Wednesday, dropping by $100. Despite this minor setback, the overall trend for Ethereum remains positive, with buyers demonstrating significant interest in the cryptocurrency.Ethereum – Daily Chart

• ETH Buy Signal
• Entry Price: $2,290
• Stop Loss: $2,590
• Take Profit: $1,750