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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

USDCAD remains below 1.30 after data

13:12 28 September 2018

Summary:

  • Core US PCE price index Y/Y: 2.0% vs 2.0% exp. 2.0% prior

  • Canadian GDP M/M: +0.2% vs +0.1% exp. 0.0% prior.

  • USDCAD drops back below 1.30. Trades near daily lows

 

Two data points from North America this afternoon have done little for the prospects of USDCAD bulls with the pair remaining near its lowest level of the day below the 1.30 handle after their release. First off the US core PCE price index gathers a fair bit of attention as the Fed’s preferred gauge of inflation. This metric for August came in at 2.0% Y/Y as expected, showing no change from the previous month. In M/M terms however there was a small miss here with a print of 0.0% below both the consensus forecast (+0.1%) and the prior (+0.2%). The headline figure also pulled back a little in coming in at 2.2% Y/Y from 2.3% beforehand, but this dip was widely expected. The core reading remains at the Fed’s inflation target of 2% while the stand along PCE is above it even after the recent decline.

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The PCE core remains at the Fed’s inflation target while the PCE is still close to its highest level since 2011 despite the recent dip. Source: XTB Macrobond

 

At the same time that we got the latest inflation figures from the US we also received the most recent growth numbers from Canada. There was an upside beat here with the GDP M/M for July rising more than the 0.1% expected, with an increase of 0.2%. This comes after a flat reading of 0.0% last time out. In Y/Y terms this means a rise of 2.4% compared to 2.2% expected. The manufacturing component was particularly pleasing with a rise of 1.2% M/M marking the fastest pace of growth since November 2017 with non-durable manufacturing of 2.4% the highest in four years and led by chemicals and petroleum products. The Oil industry remains a key facet of the Canadian economy and this can be shown by the strong correlation between oil extraction and GDP growth for the country’s overall industry. Given that Oil hit a 4-week high just this week it is not hard to imagine extraction rising going forward and this could boost growth further.

There’s historically been a close correlation between Canadian oil extraction and industrial GDP growth. The recent pick up in GDP hasn’t been matched by a rise in oil extraction but given that crude hit a 4-year high this week it could well pick-up going forward. Source: XTB Macrobond

USDCAD has dropped back below the 1.30 handle today and the market is now around the middle of it’s longer term channel which dates back to early summer. Source: xStation

 

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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