USD/CAD Loonie Higher As US Inflation Fail to Spur USD Gains
Canadian Currency Losing Oil Support Ahead of Fed Minutes
The CAD recovered after yesterday losses after lower than expected Canadian manufacturing sales were published. After the drop in the price of oil the Canadian economy is looking for other sectors to kickstart growth. The Bank of Canada has pushed forward the idea that a weak currency would boost the manufacturing industry, but after a year and two interest rates cuts, factories are covering the gap. Services remain the best bet for growth in Canada as they are more flexible and attracted investment with the drop in the Loonie. The USD/CAD is trading at 1.3320 caught in a tight range awaiting the release of the U.S. Federal Open Market Committee (FOMC) meeting minutes tomorrow at 2:00 pm EST.
U.S. inflation came inline with forecasts at 0.2 percent for consumer price index (CPI) and the less volatile core CPI that excludes food and energy. While economic indicators are not painting the best side of the U.S. economy, so far the American non farm payrolls report , retail sales and inflation data has not derailed the expectation that the Fed will announce a benchmark interest rate rise when the Fed meets in December 15 and 16.
The Canadian dollar will be trading without any support from domestic economic indicators on Wednesday. The next item to be releases will be the Wholesale data on Thursday and the Bank of Canada report later the same day. The highlight of the week for the CAD will be on Friday when the retail sales and monthly inflation data are published.
The price of oil has dragged the CAD around. Crude prices continued the downward trajectory from last week, only to reverse course and end up with a gain after almost heading below the $40 price level. The uncertainty and tensions that arose after the Paris attacks and the G20 meeting in Turkey have complicated the pricing of energy. The attacks put a premium on crude as supply might be constrained, but on the other hand thanks to the OPEC the world is awash in plenty of crude with tankers full of oil sailing around the world which puts downward pressure on the price of a barrel.
CAD Events to watch this week:
Wednesday, November 18
2:00 pm USD FOMC Meeting Minutes
Tentative JPY Monetary Policy Statement
Thursday, November 19 8:30am CAD Wholesale Sales m/m Friday, November 20 8:30am CAD Core CPI m/m 8:30am CAD Core Retail Sales m/m 8:30am CAD CPI m/m 8:30am CAD Retail Sales m/m