Canadian Dollar Update – Canadian dollar is still looking for direction
USD/CAD Open: 1.3703-08, Overnight Range: 1.3691-1.3729, Previous Close: 1.3702
WTI Oil open at $76.84 and gold open at $2,003.04. US markets are higher today.
For today, USD resistance is at 1.3753. Support is at 1.3675.
- FOMC minutes reaffirmed that the Fed is “data dependent.”
- Trading activity will fade rapidly after the morning’s data dump.
- US dollar opens mixed from yesterday.
The Canadian dollar didn’t get any traction following yesterday’s inflation report or the end of day Federal Fall Economic Statement. Instead, it remained hostage to the outlook for the US economy and interest rates in a Thanksgiving holiday environment, which sapped trading initiative.
Canada’s inflation rate dropped to 3.1% in October, well below the 3.8% level seen in September, but very close to the consensus forecast of 3.2%. Inflation is heading in the right direction, but the details were less encouraging. The inflation drop was due to falling gasoline prices, and if OPEC follows through with rumored production cuts, that drop may be reversed in November. Even worse, inflation for food and shelter rose, meaning Canadians are still feeling the pain.
Finance Minister Chrystia Freeland delivered her Fall Economic Statement, which was met with a collective yawn by financial markets. She forecasted a higher deficit than what was predicted in the March budget and said the government plans to increase bond issuance by $71.0 billion, compared to its March forecast.
The minutes of the November 1 FOMC meeting, released yesterday, were rather tame. Those expecting more insight into the interest rate debate and looking for a discussion on possible rate cuts were sorely disappointed. However, they were in the minority, so the impact on financial markets barely registered.
The minutes showed policymakers were still worried about inflation being sticky or even moving higher. They said monetary policy needs to remain restrictive, which wasn’t news.
EURUSD enjoyed another quiet session, trading in a 1.0882-1.0923 range. The ECB Financial Stability Review warned that the full impact of higher rates has yet to be felt.
GBPUSD traded quietly and is in the middle of its 1.2507-1.2550 range, with UK traders awaiting Chancellor Jeremy Hunt’s Autumn Statement. He is expected to announce tax cuts to boost growth.
USDJPY traded in a 148.02-149.36 range, with prices being underpinned after the Cabinet Office downgraded its growth outlook.
AUDUSD drifted higher in a 0.6527-0.6579 range, supported by improved risk sentiment and a weaker US dollar against the majors. RBA Governor Michele Bullock warned that the inflation battle will be slow and drawn out, but her comments had little impact on trading.
Today’s US data includes weekly jobless claims, October Durable Goods orders, and the Michigan Consumer Sentiment Index.