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USD/CAD binary signal - Canada inflation data - 18 May 2018

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21:00 GMT
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The monthly inflation and retail sales report from Canada will be released today at 12:30 GMT. According to the economists polled, Canada's inflation rate is expected to 2.3% on a year over year basis. On a month over month basis, headline inflation is expected to 0.3%.

The median inflation rate is forecast to rise slightly from 2.0% to 2.1% during the month. Along with the inflation report, the monthly retail sales numbers will also be posted. Inflation in Canada has been rising at a steady pace and as a result, we expect to see a moderation in consumer prices in the near term.

The core retail sales report is forecast to rise 0.5% on the month following a flat reading the month before. Headline retail sales data is expected to rise 0.3%, slightly slower than the 0.4% increase registered in the previous month.
The economic data comes ahead of the Bank of Canada's monetary policy meeting later this month.

The central bank is expected to remain on the sidelines given the recent weakness in the labor market which lost a lot of jobs. However, if inflation continues to rise strongly and supported by a stronger than expected retail sales report, the markets could be looking at a hawkish forward guidance from the Bank of Canada.

The markets are currently speculating that the BoC could hike interest rates once again at the June meeting. The central bank had already hiked rates three times and is expected to maintain a hawkish bias going forward.

Today's binary options signal is USDCAD, the currency pair has been trading weaker with the USD outpacing the gains from the Canadian dollar. This comes despite higher oil prices. But with the U.S. dollar showing strong bullish momentum, we expect the CAD to remain weak.

It is ideal to go with daily CALL options at 1.2800 for a 21:00 GMT expiry time. We expect that the USDCAD will retrace modestly on an intraday basis before closing higher on the day.

binary options signal 18 may 2018

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion. All risks and coasts associated with online trading are your responsibility.