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USD / CAD rises to 1.2465 amid broad US dollar weakness

  • USD / CAD cuts some losses on Monday, up 0.24% during the day.
  • The US producer price index met expectations and market reaction was subdued.
  • Market participants await Wednesday’s CPI figures, they believe inflation will rise 5.8% year-on-year.

The USD / CAD rising during the American session, it was up 0.12%, trading at 1.2465 at the time of writing. Market sentiment is mixed as the futures of the major US stock indices fluctuate between winners and losers. Furthermore, the forex market is risk averse as traders fly into safe haven currencies such as the Japanese yen and some towards the dollar as confusion spreads among market participants.

Falling US Treasury Yields Undermine the Dollar

Additionally, the US yield curve flattens as 20-year yields are two basis points above 30-year yields, while 10-year yields lose five basis points to 1,444 %. Meanwhile, the US dollar index, which tracks the dollar’s performance against a basket of its peers, is down 0.15%, currently at 93.90.

However, USD / CAD is hovering around the 1.2430-60 area with no apparent bias, pending US inflation figures.

On Tuesday, the US economic calendar featured the Producer Price Index (PPI) for October, showing a 0.6%, one point higher than the 0.5% expected by analysts. However, in a year-on-year figure it rose 8.6%, unchanged according to the forecast. Furthermore, the underlying PPI for the same period on a monthly basis increased 0.4%, more than expected, while the annual base number was in line with estimates at 6.8%.

According to the report released by the Bureau of Labor Statistics (BLS), higher energy costs drove the profit. In addition, he mentioned how in recent months, bottlenecks in transportation, material shortages and rising labor costs pushed prices up throughout the economy.

The USD / CAD trader’s reaction to the news was muted as investors waited for a speech from Bank of Canada Governor Macklem at 22:45 GMT, along with US inflation figures from Wednesday.

On Wednesday, the US economic calendar will release the Consumer Price Index (CPI) for October and Initial Unemployment Claims for the week ending November 6.

Expectations for the CPI on an annual basis are 5.8%, while excluding food and energy, analysts expect an increase of 4.3%. Regarding initial jobless claims in the US, they are expected to rise by 265,000, slightly lower than the previous week at 269,000.

Technical levels / Support and resistance levels

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