The Canadian dollar is rallying strongly in the Thursday session. Currently, USD/CAD is trading at 1.2676, down 0.76% on the day. We could see further movement from the pair in the North American session, as Canada releases Retail Sales reports for July.
Dovish FOMC raises risk appetite
The highly-anticipated FOMC meeting delivered the goods, sort of. The markets had anxiously been looking for the Fed to provide some clarity on tapering, and there was even hope that policymakers might provide a timeline for scaling back bond purchases. After the meeting, Fed Chair Jerome Powell said that the Fed could taper in November if he was satisfied with the economy’s performance. As well, the dot plot showed that two more members projected a rate hike in 2022.
The markets’ reaction is that the Fed is in no hurry to raise interest rates, as they still believe that inflation will be transitory in 2022. The Fed may be committed to tapering in the next few months, but a rate hike is further down the road. This has sent risk appetite higher, lifting minor currencies like the Canadian dollar.
In his remarks, Powell mentioned the two key areas that the Fed is monitoring ahead of a taper – inflation is running well above the Fed target of 2%, while unemployment, which has dropped to 5.2%, still has some ways to go before reaching the Fed goal. The markets will be closely scrutinizing upcoming inflation and employment numbers, which will be major factors in the Fed’s decision as to when to press the taper trigger.
USD/CAD technical
-
On the upside, there is resistance at 1.2829. This is followed by resistance at 1.2885.
-
Support at 1.2659 is fluid. Below, there is support at 1.2545.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.