- USD / CAD hit seven-week highs above 1.2610 in a recent trade, although it has since retreated a few pips.
- The Canadian dollar is suffering from a drop in oil prices, and rising Canadian inflation has not come to its aid.
The USD / CAD it hit fresh seven-week highs at 1.2610 on Wednesday, slightly eclipsing last week’s high of 1.2604. Since then, the pair has pulled back a bit since the beginning of the session. Crude oil markets have been under pressure in recent hours, with WTI and Brent now down more than $ 2.0 on the day each and this has been weighing on the oil price sensitive Canadian dollar. Technicians appeared to see an earlier drop towards the 50-day moving average at 1.2530 as a buying opportunity. If the pair can cleanly break above 1.2600, then technicians can target resistance at 1.2650, the October 6 high.
CAD losses of approximately 0.25% on the day against the US dollar make it the second worst performing G10 currency on the day. Only the Australian, down about 0.5% on the day against the dollar, is worse. The loonie is underperforming despite Canada’s latest consumer price inflation report confirming that price pressures increased in October early in the session. For reference, the overall CPI rate rose to its highest level since 2003 at 4.7%, compared to 4.4% in September. That was in line with economists’ expectations but the negative CAD reaction today suggests that market participants may have been expecting a positive surprise, as seen in inflation data from the UK this morning and in the US. . In the past week.
To be fair, the Bank of Canada’s core inflation measures surprised to the upside. The main measure rose 3.8% yoy, above expectations for a 3.5% increase, while the underlying measure rose 0.6% month-on-month, above expectations of a 0.4% jump. Additionally, analysts expect inflation to rise further in the coming months amid recent disruptions at the Port of Vancouver, which has been hit by deadly floods and landslides. Scotiabank analysts said they expect headline inflation to top 5.0% by the end of the year. As for what all this means for the BoC, according to Canada-based TD Securities, “this doesn’t change anything,” as it was in line with the bank’s projections.
Technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
