RTTN:Canadian Dollar Strengthens As Crude Recovery Intact Ahead Of Fed
The crude oil recovery in the past few sessions helped lift the petro-linked Canadian dollar in early deals on Tuesday amid growing confidence that the Federal Reserve would not taper its stimulus program this year.
Light Sweet crude for December delivery rose to $98.57 per barrel before easing back to $98.13/barrel but managed to stay above the key $98.0 a barrel. Next pivotal resistance is seen around the $100.0 per barrel and the likelihood of crossing yesterday's peak of $98.82 could set a weekly high for the commodity.
Canada's Finance Minister Jim Flaherty said yesterday that the nation's budget would be balanced in 2015/16. Flaherty predicted a budget surplus of C$800 million in the 2015/16 fiscal year, well-above the Parliamentary Budget Forecast for a C$200 million surplus.
Investors look ahead to a slew of U.S. reports, including data on retail sales, producer prices, home prices, and consumer confidence slated for release later in the day, which will provide further clues for the Federal Reserve Board in assessing the strength of the U.S. economic recovery.
With the effects of the 16-day government shutdown continuing and further wrangling expected over the budget early next year, investors wait for fresh cues from the two-day Fed policy meeting that gets underway later in the global day.
Latest economic figures from Japan were quite impressive, with the retail sales in September rising well-above forecasts to 3.1 percent year-over-year and 1.8 percent month-on-month and household spending in the same month improved much higher-than expected to 3.7 percent. Jobless rate also improved to 4.0 percent from 4.1 percent in August.
In Europe, confidence among French households stayed unchanged in October, in line with economists' forecast, latest data from statistical office Insee revealed. The consumer confidence index stood at 85 in October, unchanged from the September score.
The Canadian dollar climbed to 1.4354 against the euro around 5:40 am ET, having improved from last week's new multi-year low of 1.4441. With the pair retreating from a trend-line resistance of a horizontal channel, the near-term upside target for the loonie is seen around the 1.43 area.
The Canadian currency climbed to 93.59 against the yen, staying a tad below yesterday's multi-day high of 93.61. Although the overall technical picture looks bearish, a correction in lower ranges may push the pair above the 94.0 level in the near-term.
The Canadian dollar was trading higher at 1.0434 against its Southern-boarder counterpart, improving from an early Asian session sell-offs below 1.0450. With a high probability of taking profits from last week's heavy rallies, the local currency is expected to recapture some of its lost ground above 1.04 level in the near-term.
