USD/CAD - U.S. Inflation Numbers Affect Loonie

The Canadian dollar broke through resistance of $1.2194 ($0.8200) after a week of narrow trading from $1.2121 to $1.2158. The loonie continues to trade on market sentiment as well as U.S.-dollar demand ahead of next week’s Federal Reserve meeting. The move higher in oil prices is having no positive effect on the price of the loonie. WTI is trading 1.24% higher today at $49.91 per barrel.

Consumer Price Index figures stateside were released this morning. The fundamental is the most heavily weighted event before the Federal Open Market Committee meeting September 19-20. CPI y/y and CPI y/y excluding food and energy were expected at 1.8% and 1.6%, yet posted 1.9% and 1.7% respectively. The U.S. dollar moved higher after the release on higher inflation figures, this was mainly due to the probability that the Federal Reserve will increase interest rates sooner than June 2018. After the news, equity futures started to post in the negative and are pointing to a softer open.

The euro is trading lower today as the U.S. dollar picks up support. The euro dropped against the Swiss franc overnight after the Swiss National Bank left policy unchanged and said the recent euro gains against the U.S. dollar had helped eased the franc’s overvaluation.

The pound sterling jumped higher today after the Bank of England left policy unchanged and delivered a more hawkish outlook in its statement. The central bank said they see scope for reducing stimulus in the coming months which caused the market to price in a slightly greater risk of a rate hike.

The Australian dollar is trading lower today after mixed data from Asia overnight. Australian employment change came in better than expected at 54, 200, keeping the unemployment rate unchanged at 5.6%. However, Chinese data was soft, with industrial production coming in at 6.0% to miss the market forecast of 6.6%.

Oil (WTI): $49.90 per barrel

Gold: $1,322.28 U.S. per ounce

Silver: $17.70 U.S. per ounce

Copper: $296.85 U.S. per tonne

Dollar Index: 92.34

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