Canadian Dollar Update – Canadian dollar in a rut

• Canada CPI expected to have risen 2.0% in September
• US catches a bid and rallies across the board

USDCAD open: 1.4054, overnight range 1.4030-1.4066, close, 1.4040, WTI 57.42, Gold 4265.67

The Canadian traded lower on the back of a generally firmer US dollar against the major G-7 currencies.  It was a rather dull overnight session because the US government shutdown also shut down key economic reports. However, the September inflation data is supposed to be released Friday. The looming FOMC meeting on October 29 is also limiting activity.

Canada’s September inflation is expected to rise to 2.0% y/y but it should be a non-event. CPI is well within the BoC target and they are more concerned about rising unemployment.

WTI oil prices bounced in a 56.61-57.62 range little changed from yesterday and traders are awaiting fresh catalysts.

The U.S. dollar index gained traction, pushing to a near one-week high around 98.70, helped by optimism over Trump’s planned meeting with Xi in South Korea. Hopes for even a partial thaw in relations were enough to give the greenback a lift.

It’s a packed day for equities, with a wave of quarterly earnings on tap from names like Netflix, Coca-Cola, and General Motors. Most traders, however, are marking time until Friday’s U.S. inflation print, which could nudge the Fed’s policy outlook.

Asian markets took their cues from Wall Street’s overnight strength. Australia’s ASX 200 rose 0.70%, Hong Kong’s Hang Seng gained 0.83%, and Japan’s Topix was unchanged.

As of 7:00 AM EDT, European bourses are mixed to slightly higher: the FTSE 100 up 0.20%, CAC-40 ahead 0.23%, and DAX flat, as are S&P 500 futures. The U.S. Dollar Index (DXY) sits at 98.89, the 10-year Treasury yield is 3.978%, and gold (XAUUSD) is trading near 4,260.

EURUSD drifted between 1.1611 and 1.1656 and is hovering near session lows in New York. With traders waiting for Friday’s CPI and next week’s ECB meeting, momentum is light. Technicals remain tilted lower, with a short-term downtrend channel steering prices inside 1.1600-1.1650.

GBPUSD traded listlessly within 1.3366-1.3417. With no fresh data to chew on, attention turned to Britain’s latest borrowing numbers, which analysts called a “dismal” setup for November’s budget.

AUDUSD slipped within 0.6477-0.6525 as broad U.S. dollar demand kept the Aussie under pressure. A new rare-earth agreement between the U.S. and Australia failed to spark any currency enthusiasm.