As of 2:30 p.m. BST, the Canadian dollar traded at 1.3268 against the US dollar.
The US dollar continued to lose ground against the Canadian dollar for the second day, giving back a large portion of its weekly gains, as Poloz suggested that a rate cut is off the table.
In his speech delivered yesterday in Toronto, Bank of Canada Governor Poloz said that “monetary conditions were about right given the situation”, lowering rate cut expectations to around a 10% chance of a December rate cut and increasing demand for the Canadian dollar.
Canadian data of today shows better than expected core retail sales that edged higher 0.2% in September, beating market forecasts of a 0.1% fall. Retail sales including automobiles were also surprisingly higher in September at -0.1% vs a -0.3% forecast.
Higher oil prices have also been supporting the loonie. Brent crude rose around 0.90% in today’s trade on reports that OPEC could be discussing a production cut.
At the US-China trade deal front, President Xi Jinping said that China wanted to work toward a phase I deal on the “basis of mutual respect and equality”, and that China would fight back when necessary. Nevertheless, those comments didn’t have a large impact on the market’s risk sentiment.
From a technical standpoint, further gains of the US dollar against the Canadian dollar look quite limited to the upside, with the RSI showing a hidden bearish divergence and the USD forming a bear flag.
The November 14 high of 1.3270 acts as a support level for the price, the break of which could push the pair further down to the lower 1.32s.
To the upside, this week’s high of 1.3327 could attract new sellers to the market.