USDCAD Analysis
| Performance after Wednesday | |||||
| Period | Pct | Chg | Momentum | ||
| Wednesday | -0.21% | -29.3 Pips |  |
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| Week to-date | -0.18% | -24.2 Pips |  |
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| October | 1.7% | 229.8 Pips |  |
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Upcoming key events (London Time)
Thu 01:30 PM USD Monthly Retail Trade (1-mth)
What happened lately
In Canada, the economic data for September indicates mixed signals. The Bank of Canada Core Inflation CPI rose slightly to 1.6% from 1.5% in August, reflecting a minor increment in the underlying inflation excluding volatile items. However, the headline Consumer Price Index (CPI) inflation rate showed a decrease, with the one-month CPI dropping to -0.4% from -0.2% in August, signaling deflationary pressures in the short term. Nevertheless, the BoC CPI Core for September demonstrated stabilization by increasing marginally to 0%, bouncing back from the previous month’s negative figure of -0.1%. Overall, Canada’s annual CPI inflation rate experienced a decline from 2% in August to 1.6% in September, reflecting an easing inflationary pressure over the year, as reported by Statistics Canada.
In the United States, the New York Empire State Manufacturing Index notably fell from 11.5 points in September to -11.9 points in October, highlighting a contraction in New York’s manufacturing activity. This decrease in the index suggests weakening economic conditions in the manufacturing sector, which may concern policymakers and investors about broader economic developments within the country. The decline is significant as it portrays a negative outlook and potential uncertainties in the manufacturing sector’s future performance, as highlighted by the New York Fed.
The recent data releases have implications for the USDCAD exchange rate. The decrease in Canada’s CPI inflation rates suggests weakening inflationary pressures, which might lead the Bank of Canada to maintain or consider slight adjustments to its current monetary policy stance. Simultaneously, the substantial drop in the U.S. Empire State Manufacturing Index might dampen investor confidence in the U.S. economy, albeit temporarily. Consequently, these developments led to a decrease in the USDCAD pair, with the currency pair dropping by 0.21% to 1.37570. Potential future moves in the exchange rate may be influenced by upcoming U.S. economic events such as the monthly retail trade figures, which could sway market sentiments and alter the trajectory for the USDCAD, depending on the data outcomes. The juxtaposition of Canadian and U.S. economic indicators will continue to play a pivotal role in the currency pairs’ movements in the near term.
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What can we expect from USDCAD today?
USDCAD on Wednesday dropped -0.21% to 1.37570. Price is above 9-Day EMA while Stochastic is falling.
Updated daily direction for USDCAD looks bearish as the pair posted lower in Wednesday trading session.
Looking ahead for the day, immediate support level is at S1 1.3737 with break below could see further selling pressure towards S2 at 1.3717. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.37930 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.37450 would indicate selling pressure.
For the week to-date, take note that USDCAD is mixed as compared to the prior week.
Key levels to watch out:
| R3 | 1.3833 |
| R2 | 1.3813 |
| R1 | 1.3785 |
| Daily Pivot | 1.3765 |
| S1 | 1.3737 |
| S2 | 1.3717 |
| S3 | 1.3689 |
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