The Canadian dollar suffered from a one-two data punch. Canadian inflation data was soft while US Housing Starts and Building Permits were firm. Canada October CPI rose 1.4%, y/y as expected but down from Septembers 1.6%, y/y gain. South of the border, Building Permits surged 5.9% (forecast 2.0%) while Housing Starts rose 13.7% (forecast 5.6%).
The US dollar rallied. USDCAD climbed to 1.2811 from 1.2749 at the morning open. EURUSD dropped to 1.1774 from 1.1819.
The US dollar opened in New York with losses against Euro, Yen, Sterling and Swiss. It was flat against the Canadian dollar but posted decent gains against the antipodean currencies.
A dose of US political theatre, profit taking and Fed speak contributed to the moves.
The Wall Street Journal reported that Special Counsel Robert Meuller issued subpoenas to over a dozen of Trump’s campaign officials. The US dollar dropped across the board in early Asia trading.
Weaker than expected New Zealand PPI data trumped the short-lived NZDUSD rally and it dropped from 0.6881 to 0.6782. AUDUSD tracked kiwi lower.
The WSJ story knocked USDJPY off its perch. USDJPY dropped to the week’s low of 112.40 before ticking upwards into the New York open.
EURUSD surged, rallying from 1.1766 to 1.1820. Traders focused on the WSJ story while ignoring San Francisco Fed President John Williams calling for a rate hike in December and three more in 2018. ECB President Draghi reiterated the need for a “patient and persistent approach to monetary policy.
The broad US dollar weakness boosted Sterling. GBPUSD climbed from 1.3192 to 1.3259, helped by seemingly hawkish comments from Bank of England Governor Mark Carney on the prospect for rate hikes. Prices retreated to 1.3207 when New York started the day.
WTI oil prices traded sideways in a $54.92-$55.45 bands until midmorning in Europe when they jumped to $55.92. The Saudi Energy Minister reportedly said that he was in favour of further production cuts.
USDCAD Technical outlook:
USDCAD is in an uptrend above the 1.2690-1.2705 area gains have been capped by resistance at 1.2790. Traders need a catalyst to resolve the impasse and today’s CPI data may be just what the doctor ordered. The break above resistance in the 1.2780-00 area has hung a target on the 1.2910 area. For today, USDCAD support is at 1.2770 and 1.2740. Resistance 1.2830 and 1.2870.
Chart: USDCAD daily