Canadian Dollar: Stays weak against US Dollar on soft CPI – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank’s strategists Shaun Osborne and Eric Theoret report that USD/CAD is trading around 1.3773 as the Canadian Dollar (CAD) underperforms following a downside Consumer Price Index (CPI) surprise. They note the data keep the Bank of Canada (BoC) on hold even as global price pressures loom, while front-end spreads widen and the pair trades more than one standard deviation above its fair-value estimate near 1.3567.

CAD pressured after soft CPI

"The CAD has failed to pick up any of the positive sentiment that has lifted the MXN, AUD and NZD even modestly so far today. Yesterday’s CPI data surprised on the downside and continues to weigh on the CAD. There was unexpected softness in some categories (services, for example) helping dampen prices and overwhelm significant gains elsewhere (core goods). "

"The data point to the Bank remaining on the policy sidelines for now but rising global price pressures are unlikely to pass Canada by in the months ahead."

"Front-end swap spreads have widened and our estimate for the CAD’s fundamental equilibrium has drifted a little higher today (1.3567). The USD remains significantly (more than one standard deviation) above its fair value estimate, however."

"Bullish—USD gains through the 50% retracement resistance (1.3758) derived from the March 31/May 1 decline in funds support the near-term outlook for more USD strength towards 1.3800/15. Yesterday’s CPI data surprised on the downside and continues to weigh on the CAD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD off highs, back to 1.3620

GBP/USD remains slightly on the defensive at the end of the week, receding to the low 1.3600s after hitting fresh tops past 1.3670 earlier in the day. Cable’s correction comes after two daily gains in a row and amid a tepid advance in the Greenback, while poor UK data also accompany the downside.

EUR/USD treads water below 1.1700

EUR/USD now trades with modest losses around 1.1670 following another unsuccessful atempt to advance past 1.1700 the figure in a convincing fashion. The pair’s decline follows a maginal rebound in the US Dollar as market participants continue to assess recent US data as well as developments from the US bond market.

Gold trims gains, recedes to the sub-$4,600 area

Gold rapidly leaves behind Thursday’s inconclusive price action and advances markedly on Friday, briefly surpassing the $4,600 mark per troy ounce to hit three-month peaks. Meanwhile, the precious metal’s solid performance comes despite marginal gains in the buck coupled with another day of rising US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP bulls accelerate rally amid rising ETF inflows

The cryptocurrency market remains bullish on Friday, led by Bitcoin’s surge above $77,000. Altcoins, including Ethereum and Ripple, mirror BTC’s positive outlook, trading near $2,400 and $1.35, respectively.

Week ahead – Fed’s Jackson Hole and Nvidia earnings to dictate markets

Kevin Warsh to make his Jackson Hole debut amid confusing messaging. But a major hawkish surprise unlikely after bond market intervention. Nvidia earnings to also determine market direction as stock rally cools.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.