USDCAD Analysis
| Performance after Tuesday | |||||
| Period | Pct | Chg | Momentum | ||
| Tuesday | -0.45% | -63.2 Pips |  |
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| Week to-date | -0.92% | -128.9 Pips |  |
||
| November | 0.16% | 21.8 Pips |  |
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Upcoming key events (London Time)
No major events for the day.
What happened lately
In Canada, the inflation data released showed an upward trend in October. The Bank of Canada’s Core Inflation CPI on a 12-month basis rose to 1.7% from 1.6% in September, indicating an increase in the underlying inflationary pressures. Statistics Canada reported that the overall Consumer Price Index (CPI) inflation rate climbed significantly to 2% in October, up from 1.6% in the prior month. This inflation reading signals a steady rise and points to potential monetary policy adjustments if the trend continues. October’s month-over-month CPI inflation rate also turned positive, reaching 0.4% from a previous -0.4%. The one-month Bank of Canada CPI Core likewise increased to 0.4% from 0% in September, reinforcing the inflationary trend.
In the United States, the housing market showed signs of slowing down. The Census Bureau reported a noticeable decrease in Housing Starts, which fell to 1.311 million in October from a revised 1.353 million in September. This represents a significant contraction in the housing sector, compounded by a larger drop of 3.1 million from the previous count. Concurrently, U.S. Building Permits also declined, falling to -0.6 million compared to the revised 1.425 million for September. These figures suggest a cooling housing market which might imply a broader economic slowdown, potentially influencing fiscal and monetary policy considerations.
The observed economic data from Canada and the U.S. could potentially affect the USDCAD currency pair. With Canada’s inflation rates rising, there could be expectations that the Bank of Canada might consider adjusting interest rates upwards to curb inflation, which could strengthen the Canadian dollar against other currencies. On the contrary, the slowdown in the U.S. housing market may signal weaker economic conditions, exerting downward pressure on the U.S. dollar. Consequently, the Canadian dollar could appreciate relative to the U.S. dollar, influencing the USDCAD exchange rate, as evidenced by its recent drop of 0.45% to 1.39570.
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What can we expect from USDCAD today?
USDCAD on Tuesday dropped -0.45% to 1.39570. Price is below 9-Day EMA while Stochastic is falling.
Updated daily direction for USDCAD looks bearish as the pair posted lower in Tuesday trading session.
Looking ahead for the day, immediate support level is at S1 1.39258 with break below could see further selling pressure towards S2 at 1.38946. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.40366 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.39500 would indicate selling pressure.
For the week to-date, take note that USDCAD is mixed as compared to the prior week.
Key levels to watch out:
| R3 | 1.4099 |
| R2 | 1.40678 |
| R1 | 1.40124 |
| Daily Pivot | 1.39812 |
| S1 | 1.39258 |
| S2 | 1.38946 |
| S3 | 1.38392 |
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