The US dollar traded mostly unchanged against the Canadian dollar on Wednesday, fluctuating inside a narrow range between 1.3227 and 1.3239 as markets await the FOMC monetary policy meeting at 7:00 p.m. London time.
It’s widely expected that the Fed will keep rates at their current range of 1.50-1.75%, especially after a series of economic reports signaled a rather strong US economy. Stocks are near all-time highs, markets are optimistic about a phase-one trade deal between the US and China, and the latest NFP report showed the economy created an impressive 266K of new non-farm jobs.
Nevertheless, investors will be closely following the FOMC press conference at 7:30 p.m. for hawkish or dovish comments from Governor Powell.
Yesterday, trade deal optimism hit the market after reports emerged that the Trump administration could delay new tariffs on Chinese imports after the December 15 deadline. Beijing said that trade talks were going as planned, with both sides discussing how to lift current tariffs rather than imposing new ones. This helped the Canadian dollar find a bid in yesterday’s trade.
Regarding economic reports, the Canadian dollar has been barely scratched by the Capacity Utilization Rate for Q3 which came in at 81.7%, slightly below Street forecasts of 82.0%.
In the United States, consumer prices rose 0.3% in November, beating expectations of a 0.2%. The core CPI (excluding the volatile categories of food and energy) matched forecasts of a 0.2% growth in November. Markets haven’t reacted to these reports as strongly as usual, given that all eyes are set on the Fed meeting this evening.
Technicals show the US dollar could lose further ground against the Canadian dollar below the 1.3270 level. This resistance also aligns with the 61.8% Fib level of the post-BoC downturn in the pair. As of 2:30 p.m., one US dollar bought 1.3233 Canadian dollars in London.
