Canadian Dollar plunges after US CPI inflation sparks Fed fears, investors flee into safe havens

Share:

• The Canadian Dollar is slumping against the US Dollar as markets scatter after a US CPI data beat.
• An uptick in US consumer prices is sending US Treasury yields higher as investors fear further Fed rate hikes.
• The Canadian Dollar finds little support in the inflation rush into safer assets.

The Canadian Dollar (CAD) has tumbled against the US Dollar (USD) on Thursday following a bumper reading for the US Consumer Price Index (CPI) inflation, sending the USD/CAD pair into testing the 1.3700 handle as the DXY US Dollar Index soars in the US market session.

Economic data for Canada remains thin on the calendar, with nothing else in the pipe for the rest of the week.

Annual US CPI held steady in September, while investors were hoping for another tick lower.

With US inflation holding higher for longer than investors had expected, concerns that the Federal Reserve (Fed) could push further rate hikes down the chute are sending traders scattering into the safe haven of the USD, taking the broader market lower and sending the CAD into the week’s lows.

Daily Digest Market Movers: Canadian Dollar slumps in US CPI inflation flight

• US CPI inflation snubbed market expectations of further price cooling.
• US CPI inflation increased 0.4% for September on month, less than the 0.6% but above the market’s expected 0.3%.
• The annual figure into September also beat expectations, printing steady at 3.7% against the forecast of 3.6%.
• US Initial Jobless Claims also held steady at the previous week revised 209K versus the forecast 210K.
• Canadian data is absent from the rest of the week’s economic calendar after Wednesday’s Building Permits showed a surprise uptick to 3.4% against the anticipated 0.5% and the previous decline of 3.8%.
• Crude Oil prices are struggling to develop firm bids after US CPI data, further draining support for the Loonie.
• WTI Crude Oil rose towards $84.00 before falling back into the day’s midrange near $82.50 after US inflation figures sent the market into a tailspin.
• Canadian consumers pare back spending – RBC

Technical Analysis: Canadian Dollar slumps as investors pile into US Dollar, USD/CAD taps 1.3700

The USD/CAD pair is up 0.7% on Thursday into 1.3690, with the day’s high sitting close by at 1.3701, north of the 200-hour Simple Moving Average (SMA) near 1.3662.

The USD/CAD started Thursday with an early low at 1.3571, and the pair springboarded off near-term support from the 1.3580 level.

On the daily candlesticks, an extension of the USD’s bullish bounce will see the USD/CAD build out a push back into the month’s highs near 1.3775, with technical support propping up prices from the 50-day SMA currently rising into 1.3550.