The Canadian dollar had a choppy overnight session. USD/CAD fell from $1.2444 in Asia to $1.2413 in early New York, trading the rebounded to $1.2440.
The Canadian dollar is at the mercy of broad U.S. dollar sentiment, and that sentiment is moderately bullish ahead of today’s inflation and jobless claims data. October Consumer Price Index is expected to have risen 0.5% m/m in October, compared to the 0.4% m/m increase in September, and dip to 5.3% y/y from 5.4% y/y.
The greenback was in demand overnight in anticipation that inflation would be higher than forecast. That raises the risk of a sharp U.S. dollar retreat on a weaker than expected report.
The U.S. weekly jobless claims data usually released on Thursday is released today as tomorrow is Veterans Day.
The Canadian dollar is underpinned by higher oil prices. West Texas Intermediate (WTI) rallied to $84.92 overnight the retreated to $83.73 in New York. Prices continue to be supported by predictions that demand will outstrip supply for the rest of this year and into 2022. However, the U.S. Energy Information Administration Shot-Term Energy Outlook report released yesterday suggests the supply/demand imbalance will correct itself in 2022.
Global equity indexes are steady to lower. The major Asia indexes closed with minor losses, led by a 0.61% fall in Japan’s Nikkei 225. European bourses are mixed. The U.K.’s FTSE 100 and Spain’s Ibex 35 index are modestly higher, the French CAC index is down, and Germany’s DAX index is unchanged. Gold and oil prices are slightly lower from where they closed, while the U.S. 10-year yield is a tick higher. Overall, an uneventful session.
Chinese data added to today’s inflation concerns. October CPI rose 1.5% y/y vs 0.7% in September, 0.7% m/m and October Producer Price Index jumped to 13.5% y/y vs 10.7% in September. Traders hope that the proposed virtual meeting between President Xi Jinping and President Biden next week will lead to reduced tensions between the nations.
EURUSD traded in a $1.1559-$1.1547 range due to broad U.S. dollar demand. Germany’s Council of Economic Advisors downgraded 2021 GDP growth and warned "the economy could be harmed if the ECB fails to react in a timely manner. As such, the Bank should put forward a normalization strategy."
GBP/USD followed EUR/USD lower with renewed Brexit issues weighing on the currency pair.
USD/JPY traded firmer along with the higher U.S. 10-year Treasury yield and general US dollar strength. The antipodean currencies were rangebound.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
