– Positive risk sentiment cannot gain traction
– WTI oil firms after US inventory data
– US dollar opens with losses compared to Wed close: GBP underperforms
USDCAD snapshot open 1.3616-20, overnight range 1.3573-1.3618, close 1.3613, WTI $79.70, Gold $1814.51
The Canadian dollar did not get any traction after the November inflation report was released yesterday. Consumer prices fell by a miniscule 0.1% in November, trimming the headline rate to 6.8% from 6.9%. the result was disappointing to those expecting a larger decline.
The Bank of Canada hinted that they would pause future rate hikes at the December 7 monetary policy meeting. They may rethink that view if the January 15 CPI report remains at current levels.
USDCAD has traded in a 1.3500-1.3700 range for most of December and it is likely to stay within that band for the rest of the year.
USDCAD gains are being slowed by rising oil prices. West Texas Intermediate extended this weeks gains overnight, rising from Wednesday’s close of $78.42/barrel to $79.85/b just before NY opened. Prices are underpinned by extreme cold temperatures in a large part of Canada and the US mid and north-west.
USDCAD direction is at the whim of global risk sentiment which is reflected in S&P 500 price action. The seasonal holidays and year end have sucked liquidity out of the market which exacerbates price swings on news and data.
EURUSD traded quietly in a 1.0606-1.0659 range. Traders ignored contradictory comments from ECB officials. Portugal’s central bank chief Mario Centeno said inflation data shows it is peaking in Q4 2022. ECV Vice President Luis de Guindos disagreed and said the ECB needs to keep raising rates at its current pace for a “period of time.”
GBPUSD rallied from 1.2083 in Asia to 1.2146 in Europe then dropped to 1.2045 in early NY. Traders were unhappy with the weaker then expected Q3 GDP data. (actual -0.3% q/q vs forecast -0.2% and 1.9% y/y vs forecast 2.4% y/y).
USDJPY traded in a 131.65-132.45 range ahead of tomorrows CPI report. CPI is expected at 3.7% y/y. A higher-than-expected result may lead to fresh talk about another YCC tweak.
AUDUSD traded in a 0.6706-0.6766 range with prices boosted by the softer US dollar profile and news that China is once again making nice with Australia.
Today’s US data includes Q3 GDP (forecast 4.3%) weekly jobless claims (forecast 214,000) and the Chicago Fed National Activity index (-0.1)