- The US Consumer Price Index (CPI) for October was lower than expected, weighing on the dollar.
- US Treasury yields slump, with the 10-year Treasury yield down nearly 30 basis points.
- Fed’s Harker: Rates are in dovish territory, and the Fed could pause around 4.50%.
The Loonie prolongs its gains against the US dollar, as evidenced by the USDCAD slump more than 1% after the publication of the US inflation report, which showed that the Federal Reserve’s monetary policy is beginning to cool inflation. At the time of writing, USDCAD is trading at 1.3350 after hitting a daily high of 1.3571.
US CPI report weakens the dollar
US stocks soar, following the release of the US CPI, and the Nasdaq staged an astonishing comeback, rising more than 5.50%. Inflation in the United States was lower than estimated, as monetary policy is starting to account for price stubbornness. The Consumer Price Index (CPI) for October rose 7.7% year-on-year, below estimates of 7.9%. In the same vein, the core CPI, which excludes volatile items such as food and energy, fell 6.3% year-on-year, below the 6.5% forecast by analysts.
At the same time, the US Department of Labor released initial jobless claims for the past week, showing that the labor market is also loosening. Applications increased by 225,000, exceeding the 220,000 expected. Notably, the previous week’s Non-Farm Payrolls report showed the unemployment rate rising from 3.5% to 3.7%.
USDCAD slumped on the release after hovering around the 1.3530 area, dipping below the 1.3400 area as the report would ease pressure on the Fed as the US central bank prepares to slow the pace of increases in interest rates. Regarding the latter, CME’s FedWatchTool reports that the odds of a 50 basis point rally have risen to 80%, up from 56% previously.
Following the release, US Treasury yields are plummeting, with the benchmark US 10-year bond rate at 3,812%, down 28 basis points, which is a headwind for the dollar. The Dollar Index, which measures the value of the dollar against a basket of six currencies, is down 1.93% to 108,311.
At the time of typing, Philadelphia Fed President Patrick Harker is cruising the news wires, saying the Fed’s dovish policy stance looks above 4% and adding that rate hikes they could pause when the federal funds rate (FFR) hits 4.5%. Harker said that monetary policy is delayed “a year or so.”
USDCAD Key Technical Levels
USD/CAD
Overview | |
---|---|
last price today | 1.3345 |
Today I change daily | -0.0187 |
daily change today | -1.38 |
Daily opening today | 1.3532 |
Trends | |
---|---|
daily SMA20 | 1.3647 |
daily SMA50 | 1.3519 |
daily SMA100 | 1.3222 |
daily SMA200 | 1.2973 |
levels | |
---|---|
Previous daily high | 1.3542 |
Previous Daily Low | 1.3411 |
Previous Weekly High | 1.3808 |
Previous Weekly Low | 1.3469 |
Previous Monthly High | 1.3978 |
Previous Monthly Low | 1.3496 |
Daily Fibonacci of 38.2% | 1.3492 |
Daily Fibonacci of 61.8% | 1.3461 |
Daily Pivot Point S1 | 1.3448 |
Daily Pivot Point S2 | 1.3364 |
Daily Pivot Point S3 | 1.3317 |
Daily Pivot Point R1 | 1.3579 |
Daily Pivot Point R2 | 1.3626 |
Daily Pivot Point R3 | 1,371 |
Source: Fx Street
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