 |
The US dollar gave back gains against the Canadian dollar after two consecutive bullish days. Risk sentiment turned slightly positive and Poloz hinted no change in the current monetary policy.
Risk appetite has slightly increased after positive trade headlines and reports that Beijing is “cautiously optimistic” on reaching a phase-one deal. China has also invited US officials for more talks, signaling that further progress in trade negotiations could soon be made. Markets reacted with increased demand for risk assets (NZD is overall a top-performer for the day), but the US dollar was also higher against most major currencies.
The Philly Fed Manufacturing Index gave another push to the greenback after the indicator showed that US manufacturing activity remained strong in November. The index came in at 10.4, beating market expectations of 7.0, and rising strongly from the previous month’s reading of 5.6.
On the Canadian side, Bank of Canada Governor Poloz delivered a speech in Toronto and said “We think we have monetary conditions about right”, lowering market expectations for a rate cut in December. Yesterday’s CPI data which held steady at 0.3% has also provided a signal that the BoC will likely stick to the current policy at their next meeting.
From a technical standpoint, the USD/CAD pair is reaching a short-term support level that aligns with the November 14 high of 1.3270. While the overall tone remains bullish, the US dollar could have difficulties to sustain gains in the coming period given the current trade deal developments.
The October 10 highs of 1.3345 act as a strong resistance to the upside, while a break below 1.3270 could see a retest of lower 1.32s. As of 2:40 p.m. London time, the pair traded at 1.3275.
|
