Daily Afternoon Report 18.10.2016
The U.S. dollar slid lower against its Canadian counterpart on Tuesday, as the release of downbeat U.S. inflation data weighed on the greenback, while a more positive manufacturing sales from Canada lifted the local currency.
USD/CAD hit 1.3055 during early U.S. trade, the pair’s lowest since September 29; the pair subsequently consolidated at 1.3077, declining 0.39%.
The pair was likely to find support at 1.3025, the low of September 23 and resistance at 1.3184, Monday’s high.
The U.S. Commerce Department said the consumer price index rose 0.3% in September, in line with expectations and after a 0.2% increase the previous month.
Year-on-year, consumer prices increased 1.5% last month, also in line with forecasts and after having risen 1.1% in August. That was its highest reading since October 2014.
Core CPI, which excludes food and energy costs, increased by 0.1% last month, below forecasts for a 0.2% rise.
The weak report further dampened optimism over the strength of the U.S. economy, after U.S. industrial production data missed expectations on Monday.
Sentiment on the U.S. dollar was also fragile after Federal Reserve Vice Chairman Stanley Fischer said on Monday that economic stability could be threatened by low interest rates, but it was “not that simple” for the Fed to raise rates.
Meanwhile, Statistics Canada reported that manufacturing sales increased by 0.9% in August, beating expectations for a 0.2% rise, after an uptick of 0.1% the previous month.
The Canadian dollar was also boosted a rise in oil prices on Tuesday, as traders still awaited details of a planned output cut by the Organization of the Petroleum Exporting Countries.
The loonie was higher against the euro, with EUR/CAD dropping 0.47% to 1.4370.