USD/CAD directionless as US inflation slows

The Canadian dollar is having a quiet Friday session. Early in North American trade, USD/CAD is trading at 1.3181, down 0.09% on the day.

US consumer inflation slows

The week has wrapped up with key inflation numbers out of the US. The August data was respectable but still softer than the July numbers. Both the headline and core readings slowed to 0.6%, down from 0.4%. However, the readings managed to beat the forecasts – the estimate for headline inflation was 0.3%, while the projection for core consumer inflation was 0.2%.

Has the US dollar turned the corner? After weeks of acting as a punching bag for the major currencies, the greenback has rebounded with broad gains this week. USD/CAD has gained close to one percent this week, as the US economy continues to shows signs that the recovery is gaining traction. The Canadian dollar did gain some ground after the Bank of Canada policy meeting on Wednesday, although the bank’s rate statement was essentially a repeat of the July policy statement. As expected, the BoC held rates at 0.25% and said that rates would be maintained until inflation reaches the bank’s inflation target of two percent. Analysts don’t expect that to happen before the year 2023.

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USD/CAD Technical

 

  • There is resistance at 1.3224. Close by, there is resistance at 1.3255
  • 1.3141 is the next line of support. Below, there is support at 1.3089
  • The 20-day MA remains relevant and is situated just below the pair

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

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.