USD/CAD turns negative below mid-1.28s as USD weakens on CPI data
- Core-CPI disappoints in November.
- DXY edges lower below 94 ahead of FOMC.
- WTI is up nearly 1% on the day.
After spending the majority of the day moving sideways in a narrow band below the 1.29 handle, the USD/CAD pair lost its footing in the early NA session and refreshed its session low at 1.2822. At the moment, the pair is trading at 1.2844, down 0.17% on the day.
The data released by the U.S. Bureau of Labor Statistics on Wednesday revealed that the inflation measured by the Consumer Price Index rose 0.4% on a monthly basis in November and pushed the annual rate up to 2.2%. However, over the last 12 months, the core-CPI eased to 1.7% from 1.8% and weighed on the greenback. The US Dollar Index, which was preserving its daily gains above the 94 mark, lost traction and dropped to a fresh daily low at 93.78. As of writing, the index was at 93.90, down 0.17% on the day.
Meanwhile, following yesterday's fall, crude oil prices are staging a recovery on Wednesday and helping the commodity-sensitive loonie to remain strong. The barrel of WTI was last seen trading at $57.50, adding 0.7%.
The FOMC is scheduled to release the December meeting decision later in the session. Although a 25 bps rate hike is widely anticipated, a hawkish outlook for 2018 could provide a late boost to the DXY." We anticipate the updated ‘dot plot’ will reaffirm policymakers’ expectations of three further rate increases next year. The post-meeting press statement and Fed Chair Janet Yellen’s press conference will also provide some guidance on the 2018 outlook. Overall, we anticipate the Fed to reiterate that they expect economic conditions “will warrant gradual increases” in policy rates," Lloyds Bank analysts wrote in a recent report.
- FOMC Preview: 11 major banks expectation from December meeting
Technical levels to consider
The pair could face the immediate resistance at 1.2860 (200-DMA). A daily close above that level could open the door for further gains toward 1.2915 (Oct. 31 high) and 1.3000 (psychological level). On the downside, supports align at 1.2800 (psychological level), 1.2750 (50-DMA) and 1.2623 (Dec. 5 low).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
