USD/CAD: CAD continues to drift higher – Scotibank

FXStreet Insights Team FXStreet

The Canadian Dollar (CAD) continues to drift higher. Steady CAD gains over the past three sessions reflect general USD weakness but might also reflect some liquidation of the huge mass of CAD shorts reflected in the recent CFTC data, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Bulls to test 1.3645/50 near term

“The weaker USD is sitting marginally below my fair value estimate today (1.3619) which may mean limited room for additional losses in the short run. The consensus call for Canadian CPI is +0.4% M/M but there is a wide-ish band of expectations around the outcome. Despite a chunky rise in the July month, headline prices are expected to slow to 2.5% in the year, down from 2.7% in June. Core Median and Trim measures are both expected to decelerate a tenth to 2.5% and 2.8% respectively.”

“Slowing inflation will keep the BoC on track to deliver more easing in the coming months, regardless of what happens outside of Canada. Swaps are pricing in 27bps of easing risk at the September 9th meeting and a total of 74bps of cuts over the three meetings left before year-end. Weaker data may check the rise in the CAD in the short run but swaps look very fully priced already.”

“USD/CAD losses are nearing major support just under the 1.36 point. The USD based around 1.3595 in May and July and the 200-day MA sits at 1.3595 this morning. Technical momentum is bearish on the intraday and daily charts. Weekly oscillators are neutral, but close to turning bearish. A sustained break under 1.3595 would drive more USD losses towards major trend support (1.3475 currently) off the mid-2021 low. Resistance is 1.3645/50.”

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 hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.