- Sinking WTI oil prices weigh on Loonie
- Global markets cautious ahead o US inflation report Tuesday
- US dollar opens mixed and CAD lags antipodean currency gains
USDCAD snapshot open 1.3659-63, overnight range 1.3634-1.3673, close 1.3646, WTI $70.42, Gold $1792.26
The Canadian dollar is back testing support after West Texas oil prices continued to slide overnight and FX markets remained cautious ahead of Tuesday’s US inflation report.
USDCAD bounced around in a 1.3634-1.3673 range overnight with WTI oil price action overshadowing S&P 500 futures moves. The futures gained 0.35% overnight but traders were focused on the 1.22% decline in WTI to a low of $70.29%. A break below the $69.90/$70.00 support area would target$69.25/b then $64.50/b. Concerns that a global economic slowdown and the Russian seaborne oil price cap of $60.00/b are weighing on prices.
The impact from the Bank of Canada 50 bps rate hike last Wednesday has faded, and the trading focus is on Tuesday’s US CPI data (forecast 7.3%, October 7.7% y/y) with particular scrutiny reserved for the CPI-ex food and energy result, which Fed Chair Powell acknowledged was of particular importance. CPI ex-food and energy is expected to rise 0.3% in November, the same as in October.
Analysts are concerned that CPI may be higher than expected after Friday’s PPI data rose higher than forecast.
US Treasury Secretary Janet Yellen predicted inflation would be much lower by the end of 2023. The former Fed Chair also said she was hopeful for a healthy labour market. Here comments were not a factor.
Asian equity indexes followed Wall Streets lead and closed with losses. Hong Kong’s Hang Seng Index was the biggest loser shedding 2.20%, partly due to the surge in Covid cases in China after covid-zero restrictions were eased and profit-taking ahead of Wednesday’s FOMC meeting.
European equity indexes are drifting down, led by a 0.040% dip in the German Dax and a 0.39% fall in the French CAC index.
Gold (XAUUSD) is steady at $1791.70 down just 0.32% from Friday’s NY close.
EURUSD traded in a 1.0507 to 1.0572 range with prices tracking broad US dollar sentiment but limiting gains ahead of Thursday’s ECB meeting.
GBPUSD rallied in a 1.2208 to 1.2295 range supported by better-than-expected UK data. October GDP rose 0.5% m/m (forecast -0.1% m/m.
USDJPY traded in a 136.57-137.12 band. Prices were underpinned by higher US treasury yields as the 10-year yield climbed to 3.521% today from 3.452% Friday.
AUDUSD traded in a 0.6759-0.6799 range with prices supported by hopes for an accelerated China reopening,
There a no US or Canadian economic reports today.
