 Canadian Dollar's rally gathers additional momentum during early US session, buoyed by data that depicted faster re-acceleration in Canadian inflation than anticipated. It is noteworthy that the surge in headline inflation figure was chiefly influenced by escalating gasoline prices, yet inflation excluding gasoline did not decelerate as BoC would love to see. This scenario is poised to raise eyebrows at BoC, prompting concerns over whether current interest rates are restrictive enough to pull inflation back to target. This data also escalates the importance of BoC's summary of deliberations slated for release tomorrow. Beyond Loonie, Australian and New Zealand Dollars follow suit as the day's strong performers. In contrast, Yen lags, primarily due to an increasing yield gap with other major economies. Dollar and Euro are similarly struggling, only slightly outperforming Yen, while Sterling and Swiss Franc find themselves sandwiched in between. However, this dynamic could undergo a radical transformation, with pivotal releases such as FOMC decision and UK CPI data set to unravel tomorrow, coupled with featured policy announcement from BoE, SNB, and BoJ later this week. On the technical front, the longevity of Canadian Dollar's rally is in the spotlight. Can this surge push EUR/CAD beyond 1.4236 cluster support level? Given that ECB has already signaled an extended pause in its tightening cycle, any hawkish tones from BoC officials in the coming days could further depress the cross. Should the 1.4236 support be taken out decisively, it opens the doors to further decline to the next cluster level at 1.4, aligned closely with 50% retracement of 1.2867 to 1.5111 at 1.3989, and 100% projection of 1.5111 to 1.4280 from 1.4822 at 1.3991. In Europe, at the time of writing, FTSE is up 0.01%. DAX is down -0.37%. CAC is down -0.02%. Germany 10-year yield is up 0.0395 at 2.751. Earlier in Asian, Nikkei dropped -0.87%. Hong Kong HSI rose 0.37%. China Shanghai SSE dropped -0.03%. Singapore Strait Times dropped -0.69%. Japan 10-year JGB yield rose 0.0086 to 0.719. |
