Canadian Dollar struggles to hold onto gains

• The Canadian Dollar tested higher on Thursday before falling back.
• Canada saw an upswing in manufacturing inflation, to little effect.
• Friday’s Canadian Retail Sales print to show a flat print.

The Canadian Dollar (CAD) drove into near-term highs early on Thursday before running out of gas and settling close to the day’s opening bids. A fresh acceleration in Canadian manufacturing inflation will add further pressure to the Bank of Canada (BoC) in the face of its acceleration of rate cuts throughout 2024, but immediate market reaction was limited.

Canada’s Industrial Product Prices and Raw Material Price Index both accelerated to the top end of their near-term ranges in October, kicking inflationary pressures on the high end at the manufacturing level of the Canadian economy. Despite the whipsaw in producer inflation pressures, The CAD saw little market impact from the low-tier figure as Loonie markets await Friday’s Canadian Retail Sales print.

Daily digest market movers: CAD churns back into the midrange on Thursday

• The Canadian Dollar tested higher early Thursday before settling back to the day’s opening bids and USD/CAD price action sticks tightly to the 1.4000 handle.
• Canadian Industrial Product Prices rose 1.2% MoM in October, well above the forecast 0.3% and entirely wiping out the previous month’s -0.8% contraction.
• Canada’s Raw Material Price Index also accelerated in October, climbing to 3.8% MoM, vaulting over both the -1.5% forecast and the previous month’s -3.2%.
• The US saw an unexpected contraction in weekly unemployment benefits seekers, with Initial Jobs Claims easing to 213K for the week ended November 15, down from the expected 220K and the previous week’s revised 219K.
• An upswing in US Existing Home Sales kept market sentiment bid into the high side.
• Loonie traders will be looking ahead to Friday’s Canadian Retails Sales for the month of September, which is forecast to hold steady at 0.4% MoM.

Canadian Dollar price forecast

The Canadian Dollar (CAD) tested a six-day low on Thursday, despite getting pushed back into the day’s opening bids. USD/CAD eased back below 1.3950 for the first time since November 13, but a lack of sustained momentum kept the pair pinned just below 1.4000.

The USD/CAD pair is stuck close to medium-tern highs with the US Dollar trading well north of the 200-day Exponential Moving Average (EMA) against the Loonie. A fresh round of CAD bidding will send the pair back into the 50-day EMA near 1.3825.

USD/CAD daily chart