USD/CAD Open: 1.3630-34, Overnight Range: 1.3606-1.3645, Previous Close: 1.3611
WTI Oil open at $85.61 and gold open at $1,923.03. US markets are mixed today.
For today, USD resistance is at 1.3663. Support is at 1.3642.
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The Canadian dollar traded aimlessly and inside yesterday’s range during a cautious overnight session.
US President Joe Biden, accompanied by the USS Ford carrier strike team is visiting Israel on Wednesday and plans talks with other leaders in the area. Arab countries may be wary of US intentions after Uncle Sam laid waste to Iraq and Afghanistan
Middle East issues aside, traders are focused on todays US Retail Sales data, which is expected to have risen just 0.2% in September, compared with 0.6% in August. The risk is that a higher than expected result underscores the resilience of the American consumer and support calls for another Fed rate hike.
North of the border, all eyes will be on today’s September inflation reading. Canada CPI is expected to be unchanged at 4.0% y/y in September which is not what Bank of Canada officials want to see. Governor Tiff Macklem said that his aggressive rate hikes are doing its job to reduce demand which will drive inflation to the BoC target of 2.0%.
The Business Outlook Survey and the Canadian Survey of Consumer Expectations tell a story of higher inflation risks. If inflation is higher then expected that, and the latest BOS data would argue for a 25 bp rate hike on October 25.
US dollar bulls have taken a time out so far this week, but that could change today if US Retail Sales rise more than expected. The September data is expected to show a gain of 0.3% m/m compared to 0.6% in August, while ex-autos are expected to rise 0.2% (previously 0.6% m/m).
EURUSD rose to 1.0562 from 1.0532 after the Eurozone ZEW Indicator of Economic Sentiment Survey rose 2.3, beating the forecast of a decline of 8 and the previous result of -8.9. However, geopolitical events have taken the bloom off the rose, and the rally stalled. EURUSD is also underpinned by €2.17 billion of option strikes in the 1.0500-1.00525 area expiring today.
GBPUSD traded negatively in a 1.2149-1.2263 range due to lower than expected August Average Hourly earnings, including bonus data (Actual 8.1% 3 m/y/y). Analysts suggest the result will encourage the Bank of England to leave rates unchanged at 5.25% when they meet next month.
USDJPY traded in a 148.75-149.76 range and is near the top of that band in NY thanks to higher US Treasury yields. The 10-year yield rose to 4.77% in NY compared to yesterday’s close of 4.70%.
AUDUSD traded in a 0.6334-0.6367 range, with prices consolidating recent losses from geopolitical risks.
NZDUSD is at its session low after trading in a 0.5880-0.5930 range. NZDUSD CPI rose just 5.6% y/y (forecast 5.9%), and the drop suggested that the RBNZ may be finished with hiking rates, with one analyst predicting a rate cut in May 2024.
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