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USDCAD Supported Ahead of Yellen Testimony, US CPI Data

Published November 17, 2016
  • USDCAD elicited support just above the 1.3400 level as the Loonie gained on a 2% rise in oil prices 
  • Speculation continues to swirl on whether OPEC officials can come to an agreement on oil production by the end of November
  • Venezuelan officials stated yesterday that there "is sufficient will among OPEC countries to take the step we need to take (to reach) a forceful agreement"
  • Prices rose above $46 this morning and most of this rally from Monday's lows circa $42 can likely be viewed as short covering; fundamental data out of the US has been bearish with yesterday's EIA data showing another large build of crude inventories of over 4M barrels last week
  • Fed Chair, Janet Yellen, testifies before Congress on "The Economic Outlook" this morning starting at 10am ET
  • While the Fed is widely seen as playing a less central role in market sentiment going forward, given rising inflation expectations under a Trump administration pursing large scale fiscal stimulus, it will be interesting to see if she has shifted her historically dovish outlook as much as the market may have assumed
  • The US releases a slew of key data this morning highlighted by CPI, housing starts, and jobless claims at 830am ET
  • There is a large USDCAD 500M option expiring this morning with a strike of 1.35 at the NY 10am cut and Friday sees a massive USDCAD 2.3B option also expire with a strike of 1.35, so we could see the market gravitate upwards as they come off 
  • Canada reports October CPI on Friday as well so things could prove to be very volatile over the next two trading sessions – lots of opportunity for those who are prepared!

Charts: (1) USDCAD bias to the topside. (2) Secular USD bull markets typically last 9 years. (3) Economic Calendar.