CAD drops for tenth day on the trot ahead of CPI – Scotiabank
|The Canadian Dollar (CAD) has lost ground against the USD for 10 days on the trot now—Bloomberg reports that this is the worst run for the CAD since 2017. The CAD is oversold and the sustained sell-off is, like the bull run in the USD more broadly, unlikely to extend much further without some sort of pause or minor consolidation in my opinion, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
CAD is getting roughed up
“Today’s CPI is expected to show further progress on headline inflation—down 0.3% in the September month for a 1.8% rise in the year. Core Median and Trim measures are expected to rise 2.3% (the same as August) and 2.5% gains (up from 2.4%) respectively. With the CAD on the ropes and progress on core inflation slow, the data may bring additional reasons for the Bank to avoid an aggressive rate cut at the end of the month.”
“There are no evident signs that the USD is poised to retreat but it’s rally is looking stretched. Some consolidation in the next few days would not surprise but the trend higher remains quite strong and the CAD will need to recover through 1.3600/10 to show any real sign of technical strength. More likely is that minor dips (to the low/mid 1.37 area) will remain well supported.”
|USD/CAD RSI is overbought on the daily study but DMIs are aligning bullishly for the USD across the short- , medium– and long-term oscillators which will keep the USD trend supported on minor dips for now. Resistance is 1.3850 and 1.3950 (recent peaks).”
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