Loonie rises after strong inflation numbers
European stocks and American futures rose today as traders waited for key monetary policy announcements. In Europe, the Stoxx-600 index rose by 1.2% while the Dow futures pointed to a 161-point gain. With no major economic data from the US and EU expected today, investors are waiting for the minutes of the previous Fed and ECB meetings, which will be released tomorrow. Investors are also paying attention to the upcoming Jackson Hole summit, where global central bankers meet to discuss monetary policy decisions. Later today, the US will release existing home sales numbers for July. Meanwhile, investors cheered the earnings of big-box retailer, Target, which boosted the annual revenue target.
The price of crude oil continued rising today, continuing a rally that started on August 7. The rally today was likely because of the American Petroleum Institute (API) inventories numbers, which were released yesterday. The data showed that inventories declined by more than 3.5 million barrels in the past one week. This was after increasing by 3.7 million in the previous week. The EIA will release the official inventories numbers later today. Investors expect these numbers to show that the inventories declined by more than 1.88 million barrels.
The Canadian dollar rose today after the country released better-than-expected inflation numbers. In July, the headline consumer prices rose by an annualized rate of 2.0%, which was higher than the consensus estimate of 1.7%. On a MoM basis, the prices rose by 0.5% after dipping by 0.2% in June. The core CPI rose by an annualized rate of 2.0%. The median and trimmed CPI remained unchanged at 2.1%. The positive inflation numbers are an indication that the central bank might continue holding interest rates for the next part of the year.
The USD/CAD pair is trading at 1.3270, which is much lower than today’s high of 1.3346, which was an important resistance level as shown on the chart below. The day’s low was also along the lower line of the Bollinger Bands and slightly below the important diagonal shown below. The RSI has continued to decline as did the on balance volume indicator. With the strong inflation numbers, there is a likelihood that the pair will continue moving lower in the American session.
The EUR/USD pair moved slightly higher although the pair remained between the channel of 1.1113 and 1.1065 that has been forming throughout the week. The price is slightly above the 14-day and 28-day moving averages while the Force Index is slightly unmoved. The same applies to the True Range Indicator. This consolidation means that the pair could have a significant breakout.
The AUD/USD pair rose to an intraday high of 0.6798, which is just 2 pips below 0.6800. On the 30-minute chart below, the price is above the 14-day and 28-day moving averages. The RSI has moved above the overbought level of 70. The signal line of the MACD has continued to rise. While the pair could continue moving higher, there is a possibility that it could move lower as it approaches an important resistance level.