Canadian Dollar Update, October 20, 2022 – Canadian dollar ignores inflation report
USD/CAD Open: 1.3739-43, Overnight Range: 1.3706-1.3805, Previous Close: 1.3764
WTI Oil open at $83.80 and gold open at $1,641.75. US markets are higher today.
For today, USD resistance is at 1.3783. Support is at 1.3637.
- Traders ignore Canadian inflation data
- US Treasury yields rise in Asia and retreat in Europe
- US dollar opens softer compared to NY close
The Canadian dollar is riding a rollercoaster due to ever-shifting global risk sentiment. Domestic data continues to be ignored.
USDCAD rallied from the close of 1.3764 to 1.3805 in Asia trading which coincided with the US 10-year Treasury yield touching 4.18%. Treasury yields retreated to 4.11% in NY trading and USDCAD dropped to 1.3705.
Wednesday, Statistics Canada reported that inflation rose 6.9% in September which was below August’s 7.0% result but above the consensus forecast of 6.8%.
The inflation results will not make Bank of Canada officials very happy mainly because underlying inflation pressures are resilient. That suggests another 75-basis point rate hike is assured at next week’s monetary policy meeting.
The Canadian dollar correlation with WTI oil prices is frayed. WTI is locked in a $80.00/barrel-$90.00/b range and intraday price swings have little impact on the Loonie.
Asia equity markets followed Wall street’s lead and closed in the red. European bourses are clawing back earlier losses with the UK FTSE 100 close to flat while the German Dax is down 0.67%. S&P 500 futures recouped its overnight losses and are trading flat to modestly lower in NY.
EURUSD traded narrowly in a 0.9756-0.9797 band. Traders ignored German Producer Prices data, even though the results were a tad better than expected.
GBPUSD bounced inside a 1.1173-1.1240 range as political uncertainty weighs on prices. Dovish comments from Bank of England deputy governor Ben Broadbent didn’t help. He said the market may be too optimistic with where it is pricing UK interest rates.
USDJPY traded in a 149.64-150.08 range. Expected intervention from the Bank of Japan on the move above 150, failed to materialize.
AUDUSD dropped then soared in a 0.6230 to 0.6318 range with the top seen in NY. The Australian unemployment report and the National Australia Bank’s Business Confidence Survey only had a fleeting impact on prices.
US weekly jobless claims (forecast 230,000) and Philadelphia Fed Manufacturing survey (forecast -5) are on tap.
Today’s Suggested Range USD/CAD: 1.3650– 1.3750