Photo: Bing AI
October 12, 2023
- September CPI unchanged at 3.7%, higher than forecast.
- Weekly jobless claims remain firm.
- USD traded quietly overnight, opens mixed compared to Wednesday.
FX at a Glance
USDCAD Snapshot: open: 1.3586-90, range 1.3578-1.3603, close 1.3594
USDCAD see-sawed in a 1.3568-1.3626 range since yesterday with price action at the whim of US dollar sentiment. USDCAD losses are slowed by the latest retreat in oil prices and widening CAD/US 10-year interest rate differentials. Conversely, the prospect of higher oil prices stemming from increased demand and supply disruptions from the Middle East is capping USDCAD gains.
WTI oil is near the top of its $82.78-$84.46/barrel range then inched higher to $84.80/b in NY unchanged.
The intraday USDCAD technicals are bearish below 1.3610 looking for a break below the 1.3540-60 area to extend losses to 1.3320, A break above 1.3610 targets 1.3660. A move above 1.3660 would suggest a short-term bottom is in place at 1.3560 and put the focus on 1.3800.
Longer term, the uptrend line from the middle of July is intact while prices are above 1.3450.
For today, USDCAD support is at 1.3570 and 1.3530. Resistance is at 1.3610 and 1.3660. Todays Range 1.3570-1.3650
Chart: USDCAD 4 hour
G-10 FX recap
Global markets were calm and in the eye of the US inflation storm overnight. The data would determine if it was a Category 5 hurricane or merely just a strong wind. It was neither.
September CPI was unchanged at 3.7% y/y but a tick higher than expected. Core-CPI was also unchanged at 4.1%. In addition, Wednesday’s Producer prices (ex-food and energy) surged 2.7% y/y, which suggests that the Fed still has a major inflation problem, particularly because the food and shelter components rose.
Dovish comments by the Fed’s Christopher Waller, Raphael Bostic, and Susan Collins suggested that the Fed would leave rates unchanged and probably for the rest of the year. The latest inflation report, combined with the weekly jobless claims data which underscored the resiliency of the job market, means the inflation fight is far from over.
European equity indexes are in positive territory, and S&P 500 futures are up 0.28%.
The 10-year US Treasury yield ticked higher to 4.578% from the NY opening level of 4.556%, following today’s data.
EURUSD was rangebound in a 1.0614-1.0640 band overnight but fell through the bottom just ahead of and just after this morning’s US data dump, reaching 1.0572.
GBPUSD gave up its post-GDP gains and dropped from a European peak of 1.2333 to 1.2252 after the US data suggested the Fed may need to raise rates again. UK August GDP rose 0.2% m/m. Soft Industrial and Manufacturing reports were ignored. The intraday GBPUSD technicals are bearish with the break below 1.2280.
USDJPY firmed in a 148.95-149.28 range overnight and extended the gain to 149.95 after today’s US data. Prices are supported by comments from BoJ board member Asahi Noguchi, suggesting the need for prolonged easy monetary policy.
AUDUSD traded negatively in a 0.6373-0.6431 range with prices tracking broad US dollar sentiment.
FX high, low, open
Bank of China Fix: today 7.1776, expected 7.2932, previous 7.1717.
Shanghai Shenzhen CSI 300 rose 0.95% to 3702.38.China’s security regulator banned brokerages and their offshore offices from signing up new mainland clients.