USD/CAD Open: 1.3447-51, Overnight Range: 1.3442-1.3463, Previous Close: 1.3455
WTI Oil open at $77.53 and gold open at $2,026.87. US markets are lower today.
For today, USD resistance is at 1.3577. Support is at 1.3553.
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The Canadian dollar is creeping higher in what can best be described as a stealth rally. The Loonie is usually an after-thought in overnight markets and that hasn’t changed. What has changed is risk sentiment. Fear of Fed rate hikes has been replaced by fear of missing out which is starkly evident in the S&P 500 index. The S&P500 index set an new all-time high this week and prices remain at 5021.84 as traders embrace the prospect of a minimum of 75 bps in Fed rate cuts in 2024.
If today’s US inflation number for January is hotter than expected, it could lead to speculation of even more rate cuts. That would kick off another stock rally and send the US dollar lower against the majors, including the Canadian dollar.
January CPI is expected to fall to 2.9% y/y from 3.4% in December. Core CPI is expected to drop to 3.7% y/y from 3.9%. The core-number is the most important.
WTI oil prices have inched higher, rising from $6.88 to $77.83/b after the International Energy Agency predicted that world consumption of oil would increase by 1.2 million barrels/day in 2024. That’s the good news. The bad news is that the increase is significantly lower than the 2023 pace.
EURUSD traded sideways in a 1.0756-1.0778 range, with caution ahead of the US inflation numbers overshadowing the German ZEW Survey results. German economic sentiment increased from 15.2 in January to 19.9 in February.
GBPUSD rallied from 1.2609 to 1.2670, powered by cooling wage growth data and falling job vacancies, although a tight labor market dampened enthusiasm somewhat. Average earnings, including bonuses (3 months to Dec), fell to 5.8% from 6.7% previously, while the unemployment rate dipped to 3.8% from 4.2%.
USDJPY drifted in a 149.27-149.70 range as it continues to dance near the psychologically important 150.00 level. Today’s US CPI data will be the tipping point.
AUDUSD chopped about in a tight 0.6510-0.6532 band, with the top seen in the early going following robust Westpac Consumer Confidence data.
There are no Canadian economic reports today.
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