Canadian inflation data was as expected. CPI rose 1.2%, in July, year over year and Statistics Canada noted that prices rose in six of the eight major components.
Graph: 12-month percent change in CPI
Source: Statistics Canada
The data wasn’t a surprise to analysts or economists, but it may have caught some USDCAD traders off-side. USDCAD fell from 1.2685 to 1.2610 on the news. Today’s result keeps another Bank of Canada rate hike on the agenda although the data may not have been strong enough to increase the odds for a September move.
USDCAD is just below the middle of its recent 1.2500-1.2800 range, The onset of the NAFTA renegotiations may have reinforced the floor while rate hike prospects will cap the top. US data, geopolitical developments, and Donald Trump will dictate direction inside that range.
Overnight, the Barcelona terrorist attack injected a dose of risk aversion trading into markets, USDJPY was under pressure the entire time but within a narrow range.It is currently trading at a new low for the day of 108.90.
The Antipodean currencies had a good session. Both AUDUSD and NZDUSD rallied on the broad dollar weakness and have returned to where they started the week.
EURUSD inched higher in Asia but prices peaked at 1.1773 in Europe, and so far 1.1730-48 has been the range in New York trading. German PPI Index (Actual July 0.2% vs. forecast 0.1%), and Eurozone June Current account (Actual €21.2 vs. forecast €27.3) were ignored.
GBPUSD has been very choppy in a 1.2875 1.2915 range.
The rest of the day should be more of the same although the Michigan Consumer Sentiment index (Forecast 94.0 vs. previous 93.4) could give the greenback a bid.
USDCAD Technical outlook:
USDCAD is locked in a 1.2500-1.2800 trading band. A break above the 1.2800-60 area will target 1.3000. A move below the 1.2500-50 zone will lead down to a retest of 1.2415. For today, USDCAD support is at 1.2570 and 1.2540. Resistance is at 1.2670 and 1.2710
Today’s Range 1.2550-1.2650
Chart: USDCAD daily
Source: Saxo Bank
