The Loonie is gaining support from higher crude oil prices on the day, as well as stronger inflation data.
According to data from Statistics Canada, the monthly Consumer Price Index (CPI) came in at 0.4% in October, and 0.7% year-on-year, which exceeded the market expectations of 0.2% and 0.5% respectively. The monthly CPI number also beat the previous figure of -0.1%.
CPI ex-gasoline prices also improved by 1.6% monthly in October and matched the 1.0% market expectation on an annualized basis. The monthly core CPI slightly beat estimates and the previous number.
The data set the USDCAD on a path to resuming the downside, which is in tandem with a re-establishment of the risky market sentiment this Wednesday following Pfizer’s announcement that it would apply for emergency use approval from the FDA “within days” (as per a Reuters report).
Technical Outlook for USDCAD
The pair tested the minor resistance at 1.30982 but failed to get beyond it. Indeed, the USDCAD is now pulling back downwards following the rejection at that area. Further extension of the downside move puts 1.30385 under pressure. If this area breaks down, sellers may drive prices towards 1.29953, with 1.29241 also forming a viable downside barrier.
On the flip side, the USDCAD has to break above the minor resistance at 1.30982 to re-establish the price move towards the channel’s upper border. This move requires that 1.32044 and 1.32458 are taken out by strong buying momentum. A channel break to the upside targets 1.33487 initially, with 1.34297 and 1.34997 lining up as upside targets for the medium-term. This side of the coin is supported by risk-averse conditions, which could occur if there is a delay in the approval of the emergency use of Pfizer/BioNTech and Moderna’s coronavirus vaccines.
USDCAD Daily Chart