By Ketki Saxena
Investing.com – The Canadian dollar edged higher against the US dollar today, but the move was limited by cooling domestic inflation data.
On an annual basis, headline CPI eased to 3.1% in October from 3.8% in September, while core inflation also eased to its lowest levels in two years.
The data reinforced expectations that the Bank of Canada will begin cutting rates by April. Money markets are now pricing in three rate cuts from the BoC next year.
"This is yet another confirmatory point for our view that the BoC, having led the Fed during the hiking cycle, will once again be the pace setter in the 2024 easing cycle, with a cut likely as early as April," said Simon Harvey, Head of FX analysis for Monex Europe and Monex Canada.
"Markets have been slowly aligning with this view in recent weeks, which has seen the Canadian dollar lag the G10 rally amidst the softer (U.S.) dollar environment."
Data from the U.S. Commodity Futures Trading Commission showed that as of Friday, speculators had raised bearish bets on the loonie to their highest level since June 2017.
On a technical level for the pair, analysts at FXStreet note, “The short-term technical barriers for intraday trading will be last week’s low bids near 1.3660 and the USD/CAD’s bearish rejection of the 200-hour SMA at 1.3770.”
“Tuesday’s bearish action sees the pair experimenting with a downside break of a bullish trendline from July’s swing low into the 1.3100 handle. Technical support is stacked from the 50-day SMA near 1.3665 and the 200-day SMA rising from 1.3500.”