The Canadian dollar continues to post gains, as USD/CAD has dropped below the 1.10 line on Wednesday. The loonie has gained about 150 points this week, recovering most of the losses sustained last week. On the release front, US inflation numbers remain weak, as Core CPI slipped to -0.2% last month. The Federal Reserve will release a statement following its policy meeting. There are no Canadian releases on Wednesday.
There was good news from Canada’s manufacturing sector, as Manufacturing Sales, a key release, jumped 2.5% in August. This easily beat the estimate of 1.1%. This was the indicator’s strongest gain since March 2013, and helped the Canadian dollar gain close to a cent on Tuesday.
US inflation data was worse than expected on Wednesday. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation continues to be a concern and could delay an interest rate hike in 2015.
The Federal Reserve will be in the spotlight on Wednesday, with the Fed expected to trim its QE scheme by another $10 billion at its policy meeting. At one time, the Fed was pumping up to $85 billion/month, but a strong recovery has allowed the Fed to steadily taper its asset purchases, and the QE program is expected to wind up in October. There is speculation that the Fed could use hawkish language in its statement, which would be bullish for the US dollar.
USD/CAD for Wednesday, September 17, 2014
USD/CAD September 17 at 15:05 GMT
USD/CAD 1.0946 H: 1.0981 L: 1.0938
- USD/CAD moved lower in the Asian session but reversed directions in European trade. In the North American session, the pair has reversed course again as the US dollar is under pressure.
- 1.0961 has reverted to a resistance role as the pair trades at lower levels. 1.1004 is next.
- 1.0852 is a strong support line.
- Current range: 1.0852 to 1.0961
Further levels in both directions:
- Below: 1.0852, 1.0775, 1.0678 and 1.0560
- Above: 1.0961, 1.1004, 1.1124, 1.1278 and 1.1414
OANDA’s Open Positions Ratio
USD/CAD ratio is pointing to gains in long positions on Wednesday, continuing the direction seen a day earlier. This is not consistent with the movement of the pair, as the Canadian dollar has posted modest gains. The ratio has a majority of long positions, indicating trader bias towards the US dollar reversing its downward move.
- 12:30 US CPI. Estimate +0.1%. Actual -0.2%.
- 12:30 US Core CPI. Estimate 0.2%. Actual 0.0%.
- 12:30 US Current Account. Estimate -114B. Actual -99B.
- 14:00 US NAHB Housing Market Index. Estimate 56 points. Actual 59 points.
- 14:30 US Crude Oil Inventories. Estimate -0.9M.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Funds Rate. Estimate <0.25%.
- 18:30 US FOMC Press Conference.
* Key releases are in highlighted bold.
*All release times are GMT