The dollar was mixed in the Tuesday session, climbing sharply higher against the Canadian dollar past the 1.05-figure while sliding versus the euro just shy of the 1.50-level. The US economic reports released earlier today were largely disappointing. The September housing starts figure missed consensus estimates for an increase to 610k units from 598k units, instead dropping to 590k units. The September building permits reading also disappointed, falling to 573k units versus 580k units a month earlier. Meanwhile, the headline PPI figures for September were weaker than anticipated, declining by 0.6% m/m and 4.8% y/y. The core PPI readings also missed forecasts, declining by 0.1% m/m and edging up by 1.8% on an annualized basis.
BoC Unchanged, Drags Canadian Dollar Lower
The Bank of Canada left interest rates unchanged at 0.25% when it announced its monetary policy decision earlier in the session. Although the BoC sounded an optimistic tone in its subsequent policy statement, acknowledging that a recovery in economic activity is under way in Canada, it cautioned that heightened volatility and persistent strength in the Canadian dollar are working to slow growth and subdue inflation pressures. Further, the Bank said the current strength in the dollar is expected, over time, to more than offset the favorable developments since July.
USDCAD surged following the comments from the BoC, spiking past the 1.05-level from its session low of 1.0269. The pair will encounter support at 1.0460, backed by 1.4030 and 1.04. Subsequent floors are seen at 1.0370, followed by 1.0340 and 1.03. On the upside, resistance is eyed at 1.05, followed by 1.0525 and 1.0560 and 1.06. Additional ceilings are eyed at 1.0640, followed by 1.0675 and 1.07.