The Canadian dollar surged against the US dollar in today’s trade despite weak manufacturing sales released yesterday and risk-off flows following Johnson’s hard Brexit line.
Yesterday’s manufacturing sales, that came in at -0.7% in October – well below expectations of 0.0% – failed to provide strong headwinds for the Canadian dollar, even though the fourth-quarter GDP was tracking just below 0.5%. To recall, the Bank of Canada expects growth in Q4 to be at 1.3%.
Today’s CPI report for November matched forecasts with a 0.1% slowdown, taking the yearly figure to 2.2% compared to the same month last year.
Higher energy prices, which rose 1.5% year over year after a 2.9% decline in October, were the main driver of inflation pressures in November. Excluding gasoline, the annual consumer price index increased by 2.3% in November.
In the US, lawmakers are voting on Trump’s impeachment. One charge is an abuse of power based on Trump’s role in the Ukrainian investigation of Joe Biden, while the other charge is obstruction of Congress, based on the President’s refusal to allow aides to testify.
If the documents get adopted, Senate Republicans will hold a trial in early 2020.
From a technical standpoint, the USD/CAD pair looks quite bearish below the 1.32 area. With the US dollar failing to stick to its intraday gains, the pair is close to retesting the Monday low of 1.3115.
The bearish H&S pattern that got triggered today projects a medium-term profit-target at the October 29 low of 1.3042. However, the greenback may receive a bid at the lower 1.31s which aligns with some minor horizontal support zones. As of 3:00 p.m. London time, one US dollar bought 1.3122 Canadian dollars, down 0.29% from yesterday.
