– China says GDP growth exceeded expectations.
– Oil prices surge on rising geopolitical tensions.
– US dollar opens lower but clawing back losses in NY.
USDCAD: open:1.3623-27, overnight range 1.3617-1.3659, close 1.3651, WTI $88.02, Gold, $1944.24.
The Canadian dollar is trading sideways after an uneventful overnight session. Global risk sentiment is torn between being positive due to the onset of the US corporate quarterly earnings data and negative following the Hamas terrorist attack on Israel.
West Texas oil prices spiked from $84.40/b yesterday morning to $$88.57/b overnight in the wake of a hospital being bombed in Gaza and killing 500 people. Hamas blamed Israel but evidence to the contrary, confirmed by President Biden, proved the destruction was caused by a missile fired by the Palestinian Islamic Jihad. WTI held on to its gains despite the American Petroleum Institute (API) reporting that US crude inventories fell by 4.4 million barrels last week.
Canada’s September inflation report, released yesterday, didn’t do much to help or hinder Canadian dollar direction. Statistics Canada said that CPI rose 3.8% m/m in September, down from 4.0% in August, while on a monthly basis, CPI fell 0.1% in September compared to a rise of 0.1% in August.
However, the Bank of Canada uses a variety of inflation metrics when deciding monetary policy. Recently, the super-core measure of CPI has gained prominence as it strips out the volatile shelter cost component from Core-CPI (which strips out food and energy). Super Core CPI ticked higher and averaged 4.3% over the previous three months.
Nevertheless, many analysts and economists argue that the results are not “hot enough” to convince the BoC to hike rates next week.
The domestic data was overshadowed by a robust US Retail Sales report, which surged 0.7% m/m compared to the consensus forecast for a 0.4% increase. The August numbers were revised higher as well. The results support those believing that the US will avoid a recession this year.
EURUSD is trading defensively in a 1.0557-1.0595 range as traders ignored the final HICP inflation reading and just tracked broad US dollar sentiment.
GBPUSD chopped in a 1.2159-1.2212 range. UK inflation rose 0.5% m/m in September, a tick higher than the forecast of 0.4%, but not enough for the Bank of England to hike rates.
USDJPY traded quietly in a 149.50-149.75 range. The currency is underpinned by higher US Treasury yields but struggling to rise because of haven demand for yen.
AUDUSD traded in a 0.6351-0.6393 range after Chinese GDP and Retail Sales data came out better than expected.
There are a number of Fed officials speaking today which includes Lisa Cook, Christopher Waller, John Williams and Michelle Bowman.