Canadian Dollar Update – Canadian dollar crushed by US CPI
USD/CAD Open: 1.3670-74, Overnight Range: 1.3660-1.3669, Previous Close: 1.3693
WTI Oil open at $86.07 and gold open at $1,887.80. US markets are mixed today.
For today, USD resistance is at 1.3670. Support is at 1.3648.
- Markets still reeling from disappointing US CPI data.
- Tightened US sanctions on Russian crude boosts WTI.
- US dollar rebounds and hangs on to gains.
The Canadian dollar ended this week’s rally in spectacular fashion, losing 0.65% falling the US inflation numbers yesterday. However, the Australian dollar and New Zealand dollars fared far worse, falling 1.53% and 1.52%, respectively.
US headline CPI rose 0.4% m/m and 3.7% y/y which were higher than expected and derailed the “inflation tracking steadily lower” narrative. The miss was tiny, just 0.1% but it was the “Super-Core CPI” read that wreaked havoc. Super-Core CPI , which excludes shelter and energy, has been referenced by Fed Chair Jerome Powell as a very important metric in determining the future path of inflation, and it rose a higher than expected 0.6%.
Bond traders took note and drove the US 10-year Treasury yield to 4.71% from 4.54% before the eased to 4.62% in NY today.
Risk-off sentiment took a turn for the worse overnight after Israel ordered all civilians to leave Gaza in 24 hours. Those that support the beheading of babies think the order is an over-reaction.
The disappointing inflation report and escalating geopolitical tensions knocked Wall Street lower and Asian equity traders followed suit. Hong Kong’s Hang Seng Index plunged 2.33%, although fresh Chinese growth concerns played a large role in creating the losses. Australia’s ASX 200 index fell 0.56%. S&P 500 futures are down 0.16%.
European bourses didn’t fare much better. The German Dax is down 0.77% while the UK FTSE 10-0 has lost 0.31%.
EURUSD trended downward and currently lingers at near its lowest point, after ranging between 1.0514 and 1.0558 overnight. Analysts are assessing the contrasting monetary strategies of the Fed and ECB, along with growing geopolitical tensions. After slipping below 1.0550, the trend points towards a further descent to 1.0450.
GBPUSD seems to be shadowing EURUSD’s movement, dropping from 1.2226 to 1.2161. Market players anticipate the GBPUSD might find a floor due to rising speculation that the BoE could consider hiking rates because of inflation threats linked to escalating natural gas prices and the U.S. interest rate scenario.
The USDJPY was rangebound in a 149.56 -149.83 band, as the boost from increased U.S. Treasury yields was counteracted by apprehensions of potential BoJ foreign exchange actions.
AUDUSD traded negatively in a 0.6305-0.6334 range and was the weakest G-10 currency since yesterday’s NY open.
U.S. Michigan Consumer Sentiment is on tap.