USD/CAD holds key support of 1.3950 as US Dollar resumes upside
|- USD/CAD sustains above 1.3950 as the near-term outlook of the US Dollar remains firm.
- US Initial Jobless Claims came in lower at 213K than estimates of 220K.
- Traders have trimmed BoC outsize interest rate cut bets for the December meeting.
The USD/CAD pair ticks down but holds the immediate support of 1.3950 in Thursday’s North American session. The Loonie pair strives to resume its upside journey on the US Dollar’s (USD) firm near-term outlook backed by growing doubts over whether the Federal Reserve (Fed) will cut interest rates in the December meeting.
The Fed started its policy-easing cycle with a 50 basis points (bps) interest rate cut in September and took forward the process to this month with a 25 bps interest rate reduction. However, traders seem to be indecisive about the continuation of the rate-cut cycle for next month on expectations that the implementation of President-elect Donald Trump’s economic agenda will boost United States (US) inflation and economic growth.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks down in the North American session to near 106.50 after the release of the Initial Jobless Claims data for the week ending November 15. The Greenback drops even though the Department of Labor reported that individuals claiming jobless benefits for the first time came in lower at 213K than estimates of 220K and the former release of 219K, upwardly revised from 217 K.
In the Canadian region, traders have reduced some bets supporting a second consecutive larger-than-usual interest rate cut of 50 basis points (bps) by the Bank of Canada (BoC) in the December meeting. Market speculation for the BoC 50 bps interest rate cut diminished slightly after the faster-than-expected growth in the Canadian Consumer Price Index (CPI) data for October. The CPI report showed that the headline inflation rose by 2%, faster than estimates of 1.9% and the former release of 1.6% on year.
For more cues about the likely interest rate action in the December meeting, investors will pay close attention to the monthly Canadian Retail Sales for September, which will be published on Friday. Economists expect Retail Sales to have grown steadily by 0.4%.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.