Canadian Dollar Battles Headwinds Ahead of Inflation Release

Canadian Dollar Battles Headwinds Ahead of Inflation Release

Talking Points:

  • Oil is underpinning a Loonie though US shale supply looms.
  • Friday’s acceleration information will drive a executive bank’s financial process for a rest of a year.
  • The Oct USD/CAD high might come behind into play.

Fundamental Forecast for CAD: Neutral

We sojourn neutral on a Canadian Dollar though would demeanour closely during shopping USD/CAD if oil prices start to spin reduce or if Friday’s acceleration recover disappoints to a downside. In addition, disastrous news surrounding a ongoing NAFTA renegotiations with a US would also import heavily on CAD and prompt opening a brief CAD position.

The Loonie has been dragged aloft newly by a resurgent oil formidable with US Crude attack a 28-month high around $58/brl progressing this week on ongoing tensions in a Middle East. However a aloft wanton cost has bought US shale producers behind to a celebration with a latest EIA information display US wanton prolongation attack an all-time high of 9.62 million barrels of oil a day in a week by Nov 3.

And a intensity downturn in a cost of oil might not be a usually headwind confronting a Canadian Dollar with a arriving acceleration recover – Friday Nov 17 – expected to uncover consumer prices descending brief of a executive bank’s aim of 2%. Last month acceleration rose to 1.6% from 1.4% on a behind of aloft gasoline prices, however incompatible gas prices acceleration was a some-more squalid 1.1%, according to Statistics Canada.

The low turn of acceleration is also expected to stay a executive banks’ palm and keep Canadian seductiveness rates unvaried from their stream turn for a rest of a year. A weaker CAD would assistance a executive bank by importing acceleration and pushing consumer prices aloft in an economy where salary acceleration stays elusive.

A demeanour during a daily USD/CAD draft shows a pairs’ initial aim is a 23.6% Fibonacci retracement turn during 1.27136 forward of a incomparable pierce to a late Oct high of 1.29150.

Chart: USD/CAD Daily Timeframe (April 25 – Nov 10, 2017)

Canadian Dollar Battles Headwinds Ahead of Inflation Release

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— Written by Nick Cawley, Analyst

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