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USD/CAD – Canadian Dollar Rally Continues as US CPI Falters

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 Technical

S3 S2 S1 R1 R2 R3
1.0678 1.0775 1.0852 1.0961 1.1004 1.1124

 

Further levels in both directions:

 

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.

 

USD/CAD Fundamentals

* Key releases are in highlighted bold.

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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