The Canadian dollar is consolidating losses fueled by board U.S. dollar demand and sliding oil prices. The currency may also be suffering from concerns the flooding and landslides in British Columbia will negatively impact domestic growth due to disruptions in rail services.
The Canadian dollar has been under pressure since November 10, when prices rallied following a much higher than expected U.S. Consumer Price Index reading.
The losses were exacerbated when Canadian inflation data disappointed traders. CPI rose 4.7% y/y in September, and traders were expecting a larger increase.
At the same time, West Texas Intermediated (WTI) oil prices tumbled from their November 10 peak of $84.25/b to $75.05/b overnight. There are rumours that China, Japan, and the U.S. will coordinate the release of crude from their Strategic Petroleum Reserves, which may occur as global crude demand slows.
The Canadian dollar did not derive any benefit after Bank of Canada Governor Tiff Macklem appeared to suggest the timing of a rate hike may be "getting closer," when he penned an op-ed in the U.K. Financial Times. However, Deputy Governor Lawrence Schembri appeared to muddle that view when he suggested that high uncertainty around the output gap, may keep rates low.
It is Thanksgiving week in America. Many workers are on holiday for the week and most U.S. financial markets close early on Wednesday.
Wednesday is also a busy data for U.S. data. Durable Goods Orders, Weekly Jobless Claims, Q3 Gross Domestic Prpduct, Personal Income and Expenditures, New Home Sales and Michigan Consumer Sentiment are released.
In addition, the Federal Open Market Committee minutes from the November 3 meeting are released. These minutes should have little bearing on FX activity.
EUR/USD traded in a $1.1261-$1.1292 range due to contrasting Fed and European Central Bank interest rate outlooks. In addition, anti-vaccine riots in many European cities combined with talk of new travel restrictions in the Euro area because of rising coronavirus cases are weighing on the currency.
GBP/USD remained rangebound with gains capped by E.U./U.K. trade issues and broad U.S. dollar strength.
USD/JPY rallied to 114.26 from 113.93 on the back of higher U.S. Treasury yields.
The Reserve Bank of New Zealand monetary policy meeting is set for Thursday, and it is widely expected to raise rates 0.25% with some risk of a 0.50% increase. AUD/USD and NZD/USD are underpinned as coronavirus restrictions ease and their economies re-open.
