CPI m/m came in higher than expected once again for the USD as the annual inflation index hits a 40-year high at 7.5%. This is not a good sign for the currency as the value continues to drop worse than analysts and economists expected. With that said, here are 3 pairs to trade now that we see a weaker and weaker dollar.
When comparing the two currencies, the pound has the USD beat in just about every category. And I think longing this pair is probably your best bet when trading against the USD. BOE has already raised rates and are forecasted to get up to 0.75% to cap inflation and eventually reach their 2% inflation target.
I didn't think I would say this for some time, but Aussie/Dollar looks like a pair to long now. Australia's gold-heavy economy could really benefit from the sinking value of the USD that a 25 bp rate hike can't really fix. Regardless of the long term factors, it looks like we can at least expect this pair to come up to resistance around 0.72785 for a test.
USDMXN is number 3 on the list of pairs to trade, and it is also the riskiest. If you are looking for a speculative play, this pair could end up being very lucrative. As bad as the Mexican peso is, it still has a leg up on the dollar right now. The combination of high inflation, low interest on the USD paired with the peso's high interest rate (5.5%) investors have been taking a risk-on sentiment towards the pair since 2020. Taking a short on this pair, if it moves in the right direction, will not only yield you profit on the trade but also on the hefty interest it pays you to short this pair.
Today's economic figures came out in US and Canada. GDP came in higher than expected in Canada while the price of goods purchased by consumers was lower than last month. Here are some pullback ideas for USD and CAD from GDP and PCE numbers. EdgeFinder Analysis NAS100 is a bullish reading on the EdgeFinder still. […]
This week has brought more inflation data with it regarding the USD's PCE and PMI numbers. Powell is also set to speak this Friday about monetary policy going forward. The RBNZ will also release their latest interest rate news tomorrow with expectations of an unchanged rate at 5.5%. EdgeFinder Analysis GBPUSD is a bullish bias […]
This week is a big PMI week for Europe, UK and US. Additional inflationary metrics will add to the overall sentiment of these countries' monetary policies going forward. Here are some setups for the coming week on these currencies. EdgeFinder Analysis GBPCAD is now a +7 on the EdgeFinder as we wait for CPI news […]
