• BoC hiked rates by 25 bp as was widely expected yesterday, reaching the +1.50% level. In the accompanying statement the bank stated that it will take a gradual approach and remain data driven. Overall, the accompanying statement could be characterized as neutral to hawkish as it contains some optimistic forecasts about inflation and the GDP growth rate. USD/CAD dropped at the release around 40 pips, however corrected later on and traded on higher grounds.

• USD/CAD showed extensive volatility yesterday as it broke the 1.3120 (S2) support line influenced by the BoC interest rate decision and later on rose to break 1.3165 (S1) resistance line (now turned to support) and almost reached the 1.3222 (R1) resistance line later as the USD strengthened. We could see the pair continue in a sideways motion today however the release of the US inflation data could provide a further boost for the pair. Should the bulls be in charge we could see the pair breaking the 1.3222 (R1) resistance line and aim for the 1.3285 (R2) resistance hurdle. On the other hand, should the bears take over we could see the pair breaking the 1.3165 (S1) support line and aim for the 1.3120 (S2) support barrier.

US Dollar remains firm, eyes on inflation data

• Amid trade war talk the USD remained strong against its major counterparts. The bullish mood was also supported by yesterday’s inflation data and the market maybe pricing in today’s CPI release. Analysts see the case for inflation figures to be strong as oil prices rose near the end of June. It should also be noted that analysts point out that the continuing US-Sino trade dispute could start undermining the USD. The USD could continue to strengthen for a couple of days.

• USD/JPY yesterday and during today’s Asian morning, broke consecutively the 111.30 (S2) resistance line and the 112.05 (S1) resistance line (now both turned to support) reaching a six month high. The pair could trade in a sideways movement today, however technically the upward trend-line incepted the 29th of May continues to provide a bullish bias and the release of the US CPI data could boost the USD side. Please be advised that the RSI indicator has surpassed the reading of 70 implying an overcrowded long position in the 4 hour chart. Should the pair find fresh buying orders along its path we could see it breaking the 112.75 (R1) resistance line and aim for the 113.65 (R2) resistance level. On the other hand, should the pair come under selling interest we could see it breaking the 112.05 (S1) support line and aim for the 111.30 (S2) support barrier.

In today’s other economic highlights:

• In today’s European session, we get Germany’s final HICP rate, France’s final CPI (EU Norm.) rate and Sweden’s CPI rate all for June, as well as Eurozone’s industrial production growth rate for May. In the American session we get the US inflation data for June and the US initial jobless claims figure. As for speakers, Philadelphia Fed President Patrick Harker speaks. Please be advised that Riksbank’s and ECB’s meeting minutes will be released and the EIA monthly report is due out today.

USD/CAD

• Support: 1.3165(S1), 1.3120(S2), 1.3050(S3)

• Resistance: 1.3222(R1),1.3285(R2),1.3352(R3)

USD/JPY

• Support: 112.05(S1), 111.30(S2), 110.75(S3)

• Resistance: 112.75(R1), 113.65(R2), 114.70(R3)