- USD/CAD is backsliding in thin pre-holiday markets.
- The Canadian Dollar is finding support from rebounding Crude Oil bids.
- BoC rhetoric about the need for higher rates disappears from latest meeting minutes.
The USD/CAD is getting pushed lower as broader markets see a healthy risk bid that is forcing down the US Dollar (USD) and a bump in Crude Oil bids is propping up the Canadian Dollar (CAD) while the Bank of Canada (BoC) sees lower odds of inflation risks making a reappearance.
BoC minutes: Members concluded that recent data pointed in the right direction
The BoC’s latest Summary of Deliberations revealed that, prior to the Bank of Canada’s December 6 rate call, policymakers felt that higher rates are less likely moving forward as inflationary risks remain subdued. The current trajectory of inflation, while pointing steadily downward, still sees some potential risks, specifically from shelter prices and rents still running hot, helping to keep inflation overall above the BoC’s targets.
The BoC dropped language about some policymakers seeing a need for higher rates, which was present at the October 26 rate call, suggesting an underlying shift in BoC expectations, though the Canadian central bank remains willing to hike rates even further if inflationary pressures reappear in the data.
Crude Oil markets caught a bounce on Wednesday with markets continuing to be concerned over rebel attacks on container ships in the Yemen region, which could destabilize Crude Oil supply routes between Asia and Europe. West Texas Intermediate (WTI) US Crude Oil is back over $74 per barrel, helping to bolster the Canadian Dollar into one of the best-performing currencies of the major bloc.
US Existing Home Sales rose unexpectedly in November with 3.82 million housing units changing hands for the month, rebounding from October’s 13-year low of 3.79 million, handily beating the market forecast of a further decline to 3.77 million.
Read More: US Existing Home Sales rise 0.8% in November
The rest of the trading week, which will see declining trade volumes as investors wrap up for the holidays, will close out with Canadian Retail Sales and US Annualized Gross Domestic Product (GDP) on Thursday, with Canadian Gross Domestic Product and US Personal Consumption Expenditure (PCE) Price Index numbers on Friday.
USD/CAD Technical Outlook
The USD/CAD is looking to establish a foothold just above the 1.3300 handle in Wednesday trading, planting itself and looking for a rebound from 1.3320 after last week’s backslide that took the pair down from the 1.3600 region.
The 200-hour Simple Moving Average (SMA) is falling into 1.3460 as the moving average struggles to keep up with recent declines, capping off any near-term bullish momentum above the 1.3400 handle.
The USD/CAD has dropped away from the 200-day SMA on the daily candlesticks, trading into its lowest bids since early August.
USD/CAD Hourly Chart
USD/CAD Daily Chart
USD/CAD Technical Levels
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds near 1.0500 ahead of Powell speech
EUR/USD holds steady at around 1.0500 in the American session on Wednesday. The weaker-than-expected ADP Employment Change and the ISM Services PMI data hurt the USD and help the pair keep its footing. Fed Chairman Powell will speak later in the day.
GBP/USD recovers toward 1.2700 after US data
Following a pullback, GBP/USD edges higher toward 1.2700 in the second half of the day on Wednesday as the US Dollar loses strength following the disappointing data releases. Markets eagerly await Fed Chairman Jerome Powell's speech.
Gold advances to $2,650 area as US yields edge lower
Following a consolidation phase near $2,640, Gold gains traction and rises to the $2,650 area. The benchmark 10-year US Treasury bond yield pushes lower after weak macroeconomic data releases from the US, helping XAU/USD stretch higher.
UnitedHealth unit CEO murdered early Wednesday in Manhattan Premium
UnitedHealthcare CEO Brian Thompson was gunned down in Manhattan Wednesday morning. Thompson was shot by a masked gunman as he was in the city for an investor meeting.
Four out of G10
In most cases, the G10 central bank stories for December are starting to converge on a single outcome. Here is the state of play: Fed: My interpretation of Waller’s speech this week is that his prior probability for a December cut was around 75% before the data.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.