Overnight Range 1.3155-1.3217
US Retail Sales lived up to expectations and rose 0.6% in September. The PPI data beat the forecasts. Together, they help reinforce the arguments for a Fed to raise rates in December.
The Canadian dollar squeezed out a small gain overnight, supported by modestly higher oil prices and an imporovement in China data.. That moves caps a good week for the Loonie. USDCAD has declined from 1.3278 at the close on Oct.7 and is currently probing support in the 1.3140-50 area. The rash of USDCAD bullish sentiment evident for the past few weeks leaves the market vulnerable to a steeper correction to 1.3040 if 1.3140 gives way.
In Asia, the risk averse tone of yesterday gave way to a modest positive outlook when China September CPI data beat expectations. (Actual 1.9% vs. forecast 1.6%, y/y) The Producer Price index ticked higher as well. AUDUSD and NZDUSD rallied. However, Kiwi could not sustain the move and ended down on the day due to on-going rate cut concerns.
The Bank of England was front and center during the European session. Governor Mark Carney’s comment that the BoE was “not indifferent” to the level of sterling, sparked a short-covering rally in GBPUSD. Sterling had been under pressure in Asia and in European trading. Carney’s statement added and element of intervention risk” to the equation and GBPUSD recouped all of its overnight losses. Nevertheless, GBPUSD is well down on the week. It closed on Oct 7 at 1.2414 and opened in New York at 1.2215
EURUSD trended lower until mid-morning in Europe, continuing to be undermined by the prospect of a US rate hike
Oil prices finished yesterday on firm footing and continued to inch higher through-out the overnight session. WTI poked its head above $51.00/b and touched $51.12.
USDCAD technical outlook.
The intraday USDCAD technicals have flipped to bearish following the break of the uptrend line from September 22. The test and failure to extend gains above the 1.3310-20 area and the subsequent retreat below support in the 1.3190-1.3200 zone suggests that a short term top is in place. (1.3315).
A move below 1.3140 will lead to 1.3040-60. Additionally, the bullish USDCAD sentiment which had prevailed over the past two weeks could exacerbate a move lower. For today, USDCAD support is at 1.3140, 1.3090 and 1.3060. Resistance is at 1.3205 and 1.3250.
Today’s Range 1.3090-1.3190