Canadian Dollar Update, November 15, 2022 – Canadian dollar looking for direction
USD/CAD Open: 1.3271-75, Overnight Range: 1.3252-1.3324, Previous Close: 1.3316
WTI Oil open at $85.06 and gold open at $1,776.78. US markets are higher today.
For today, USD resistance is at 1.3389. Support is at 1.3225.
- Comments from Fed Vice Chair stoke risk sentiment
- European and German ZEW Survey data boost EURUSD
- US dollar grinds higher overnight
The Canadian dollar tested both sides of its recent trading range in an uneventful, but choppy overnight session.
Canadian dollar direction continues to be determined by global risk sentiment which flipped to mildly positive overnight despite weaker than expected Chinese economic data.
Chinese Industrial Production ticked down to 5.0% y/y from 6.3%, while Retail Sales fell 0.5% y/y compared to a 2.5% increase in September. The news wasn’t a total shock as renewed Covid lockdown measures took a toll.
US President Joe Biden’s meeting with Chinese President Xi Jinping is thought to be a success, mainly because existing tensions were not inflamed further. Biden assured Jinping that the US policy was unchanged while Jinping said he would work for a peaceful reunification of the island.
Traders continued to digest yesterday’s remarks by Fed Vice Chair Lael Brainard. Ms. Brainard suggested the Fed may slow its pace of rate hikes, starting with a 50 bp hike December 14. She supported her view saying, “By moving forward at a pace that’s more deliberate, we’ll be able to assess more data and be better able to adjust the path of rates to bring inflation down.”
Her comments were not new and markets were already pricing in a 50 bp hike in December. Even so, slowing rate hikes will lead to a “pivot.” Her remarks gave stock markets a lift, but those gains were erased by the end of the day.
EURUSD jumped to 1.0437 from 1.0313 when German and Euro zone Economic Sentiment and Current Situation ZEW Survey results were better than expected. The German Economic Sentiment increased by 22.5 points to -36.7, while the economic situation improved by 7.7 points. The results may be negative but perhaps the worst is over.
GBPUSD rose from 1.1742 to 1.1911 in NY on improved risk sentiment. The UK employment report was a tad weaker than previously but still very robust.
The intraday GBPUSD technical are bullish and looking for a test of resistance in the 1.2000 area.
USDJPY traded with a negative bias in a 138.97-140.62 range. Japan’s economy shrank 0.3% q/q in Q3, and 1.2% y/y due to the global slowdown.
AUDUSD firmed in a 0.6687-0.6768 range. The RBA minutes didn’t offer anything new and reiterated that a 25-bps hike was warranted due to the lag effect of higher rates on inflation.
US October PPI Ex-food and Energy data is expected unchanged at 7.2% y/y
Today’s Suggested Range USD/CAD: 1.3220– 1.3320