USD/CAD Open: 0.9943-46 Overnight Range: 0.9916-0.9953
The Canadian dollar lost some ground overnight. Overnight, the GBP lost some ground as expectations that the BoE will provide further stimulus increased. Canada’s inflation came out stronger than expected today (1.9%) but markets appear to have shrugged off the result focusing on macro eurozone headlines and the FOMC meeting. NY futures are flat. Oil is at $86.19 and gold is at $1,799.
The short term Canadian dollar technicals remain negative and the USD/CAD continues to trade within its recent sideways trading range of 0.9750 to 0.9975. For today, USD resistance is at 0.9950, 1.0025, and 1.0060. Support is at 0.9905, 0.9850, 0.9797 and 0.9700.
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Canadian inflation data was stronger than expected but recent Bank of Canada statements that interest rates will remain lower for longer has trimmed potential gains in the loonie. The BoC is in a bind with US rates expected to be low for quite a long time and raising rates too quickly could really boost the loonie, while on the other hand, simply following the US moves would be outsourcing interest rate policy to the US. Continued inflation near or above the 2% range may force the BoC to communicate to the market that lower for longer interest rates isn’t possible anymore. The markets are now focused on the FOMC meeting and announcement this afternoon, with many expecting Operation Twist, a move to adjust the Fed’s existing balance sheet and influence long termUStreasury yields. Look for the loonie to trade on eurozone headlines (bailout negotiations withGreeceand lenders) and we could see some volatility based on the FOMC meeting results.
Today’s Range: 0.9920 – 1.0020
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