Daily Forex Commentary

13 September 2017 - CAD Consolidates But Remains Supportive

By Frederick Cheng

US Dollar vs Canadian Dollar

The Loonie tested resistance at 1.2158 yesterday against the greenback. Economic fundamentals are light this week, and the Loonie finds itself trading on market sentiment and technical analysis. Crude Oil Inventories will be released at 10:30 am and may provide a back drop for the petrol currency to trade off after hurricanes Harvey and Irma battered the Gulf States. Producer Price Index figures were released at 8:30 am this morning, and the data showed that the average price change month over month was in line with consensus. PPI did rise YoY to 2.4% and less food and energy to 2.0% from 1.9% and 1.8% respectively. The biggest fundamentals ahead of next week’s FOMC meeting and interest rate announcement is tomorrow''s CPI figures. Inflation is expected at 1.9% YoY from the prior of 1.7%. The US dollar index closed at 91.88 yesterday after reaching a high of 92.04 as investors and traders are remaining nimble ahead of the Fed next week. The market is positioning to hold greenbacks going into next week’s announcement.

 

Canadian Dollar vs Euro and Great British Pound

The Euro is trading flat today. Employment in the Eurozone rose 0.4% in Q2 while industrial production and German inflation both came in as expected at 0.1% and 1.8% respectively. ECB economist Praet will speak today and may provide more insights into the ECB’s thinking.

 

The Sterling is trading softer this morning after domestic wage data came in weaker than expected. The Average Earning Index came in flat at 2.1%, missing the forecast of 2.3%. On the other hand, employment data was strong with the unemployment rate down from 4.4% to 4.3%. Base on the mixed data today, policy makers may be less encouraged to hike rates given the widening gap between wage growth and inflation.

 

Canadian Dollar vs Australian Dollar and New Zealand Dollar

The Aussie is holding steady has to go into domestic employment data and Chinese industrial production numbers this evening at 9:30 pm and 10:00 pm EST. The market is looking for an increase of 17.5k jobs and is expecting no change for the unemployment rate. Chinese Industrial Production is expected to increase to 6.6% from 6.4%.

Oil (WTI): 48.64

Gold: 1330.81

Silver: 17.81

Copper: 299.10

Dollar Index: 91.95

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