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Market Update

EncoreFX’s daily market updates are written by our experienced and professional dealing team.

Loonie Flat Ahead of Key Inflation Data at 830am ET

Published October 21, 2016
  • USDCAD is holding nicely just above the 1.3200 handle, having rallied over 2.5 cents since Wednesday's brief plunge which threatened 1.3000
  • The US dollar continues to find a broad based bid and the USD Index, an aggregate weighted measure of the greenback's performance against 6 major currencies, is approaching its best levels since January of this year
  • The probability of a December interest rate hike from the Fed continues to hold above the 60% threshold and this is helping the US 10 year treasury yield to remain above its key 200 day moving average and near a five month high at 1.7523%; to provide some context, yields were as lows as 1.3210% in June
  • This morning's action in USDCAD will be dominated by the reaction to Canadian inflation and retail sales data released at 830am ET
  • Expectations are for 0.2% monthly and 1.8% annual core readings, respectively 
  • The big risk today is a downward miss as that will pour fuel on the rate cut discussion that BoC Governor Poloz started this week
  • A sub 1.6% print on an annualized basis has the potential to move USDCAD out of it months long rage and above key resistance at 1.3300
  • To the downside, we would need to see a number above 2.0% annualized (at the very least) in order for key support at 1.3000 to be tested again in the near term
  • There are no offsetting US data this morning so it could be a very volatile end to the week
  • Oil prices have found some support above the $50 handle and look comfortable at these levels for now

Charts: (1) USDCAD found support at its 100 DMA's (red), larger range still in play. (2) Fed Rate Hike Odds above 60% for Dec. (3) USD Index at its best levels since January. (4) Economic Calendar.