USD/CAD holds onto daily gains near 1.3800
- US dollar up across the board on Wednesday on higher US yields.
- Canada: Inflation above expectations in September.
- USD/CAD up for the second day in a row, rebound from the 20-day SMA.
The USD/CAD printed a fresh daily high during the American session at 1.3808 and then pulled back to 1.3770. It is hovering slightly below 1.3800, on its way to the second daily gain in a row supported by a stronger US dollar across the board.
Canadian inflation numbers disappoint
Canadian CPI rose 0.1% in September and the annual rate eased from 7.0% to 6.9%, against market expectations of a 6.8% reading. “After some respite in August, price growth picked up in September. Economists were expecting gasoline prices to fall but did not foresee the dramatic jump in food prices”, noted analysts at the National Bank of Canada. They are seeing “significant divergences in core inflation between Canada and the US over the past 3 months, as it has moderated substantially on this side of the border. In both cases, the global slowdown, less acute supply chain issues and lower transportation costs should translate into weak goods inflation prints going into 2023”.
The loonie rose modestly after the numbers but not enough to push USD/CAD to the downside. The pair is rising after avoiding on Tuesday a daily close below the 20-day Simple Moving Average, currently at 1.3710.
On the upside, if the pair holds above 1.3800 it could gain momentum for a test of the next resistance area at 1.3830. On the flip side, a daily close below 1.3700 should open the doors to more losses.
Technical levels