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Canadian Dollar Update October 16, 2019 – Canadian Dollar awaits inflation news

USD/CAD Open: 1.3199-1.3200 Overnight Range: 1.3185-1.3232

Oil is at $53.58 and gold is at $1,490.90. US markets are lower today.

The short-term USD/CAD technicals are neutral-bullish. For today, USD resistance is at 1.3249. Support is at 1.3159.

The Canadian dollar is probing resistance in the USDCAD 1.3180-1.3200 zone. Some traders are hoping that higher than expected domestic inflation in September will be the catalyst to ignite a fresh Canadian dollar rally. The Consumer Price Index (CPI) is forecast to rise 2.1%y/y in September compared to August’s 1.9% y/y increase. Some analysts warn of an upside surprise to the data although others point to seasonal declines which should limit gains. Nevertheless, if the information is “as expected” or better, it may be enough to ensure that the Bank of Canada leaves interest rates unchanged at the October 30 monetary policy meeting.

The clock is ticking down to the October 31 Brexit deadline, making sterling the key focus for FX traders. GBPUSD soared since last Thursday, rising from 1.2205 to 1.2787 overnight as the prospects for a “no-deal” Brexit fade. UK Prime Minister Boris Johnson and Irish Prime Minister Leo Varadkar said they made progress on the Irish border issue, which triggered the rally. However, gains were capped after an Irish DUP spokesman expressed several concerns about the border proposals. Traders ignored a host of UK economic data releases.

Elsewhere, AUDUSD and NZDUSD came under pressure from disappointment around the state of the US and China trade talks. China may have said they would increase purchases of US agricultural products, but they haven’t provided any more details. Those promises were made last spring but never bore fruit, and the lack of information is disconcerting. The American’s haven’t removed any tariffs but merely delayed a tariff increase which seems unlikely to spur the Chinese authorities to act.

USDJPY consolidated gains in a 108.60-108.85 range following a sharp uptick in US Treasury yields. The 10-year Treasury yield hit 1.775% after being as low as 1.685% on Tuesday, thanks to the improved outlook for Brexit.

Traders are patiently awaiting this morning’s US Retail Sales report which is expected to rise 0.3% in September. The Canadian dollar will track broad US dollar moves following the release.

Today’s Suggested Range USD/CAD: 1.3150 – 1.3250

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By KBFX | October 16, 2019 | Daily Update | 0 comments

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