USD/CAD turns positive on the day and approaches 1.3800
- The US dollar bounces from 1.3685 and returns to 1.3775.
- The Canadian dollar loses ground as oil prices dip.
- USD/CAD to continue appreciating towards 1.40 – MUFG.
The US dollar has bounced up strongly after hitting session lows at 1.3685 earlier on Thursday. The pair firmed up as risk appetite triggered by UK PM Liz Truss’s resignation faded, turning positive on daily charts and reaching the 1.3775 area so far.
The Canadian dollar weakens as oil prices retreat
Crude oil prices, which had rallied earlier today, underpinning the commodity-linked loonie are losing ground on Thursday’s US afternoon trading. The WTI oil has retreated nearly 3% to prices below $85.00.
Furthermore, the market has shifted the focus to the upcoming Federal Reserve’s monetary policy meeting, after Truss’s resignation effect ebbed. The Fed is expected to hike rates by 0.75% for the fourth consecutive time in November, which is acting as a tailwind for the US dollar.
On the macroeconomic front, US data has been fairly positive on Thursday. Initial jobless claims increased below expectations on the week of October 14th, while existing home sales declined less than expected.
USD/CAD expected to move towards 1.40 – MUFG
Currency analysts at MUFG see the risk skewed to the upside, with the pair aiming to 1.40: “The BoC is expected to bring an earlier end to their rate hike cycle than the Fed, reflecting in part expectations that Canada’s economy will prove more sensitive to rate hikes than the US economy given household debt is much more elevated in Canada (…) We expect USD/CAD to keep moving up closer to 1.4000.”
Technical levels to watch
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
