The US dollar extended gains against the Canadian dollar on a relatively quiet trading day as US trading desks are closed for the Thanksgiving break.
Despite the lower liquidity in today’s trade, the greenback edged higher on a mild risk-off market undertone after President Donald Trump signed a bill backing protests in Hong Kong. This increased market worries over the prospects for the phase-one trade deal between the United States and China.
Gold was trading higher and most stock indices were lower for the day. Markets are now awaiting China’s move which could stop or even reverse the progress made in trade talks so far.
While the deterioration in risk appetite underpinned demand for the US dollar in today’s session, weakening oil prices and lower-than-expected trade balance weighed on the Canadian dollar.
Canada’s current account deficit widened to $9.9 billion in the third quarter, slightly higher than market forecasts of a $9.5 billion increase. The deficit on trade in goods and services widened by $2.4 billion in Q3.
The daily chart of the USD/CAD pair shows that the Canadian dollar picked up some support at the 1.3300 level as the recent bull run shows signs of a slowdown. As of 2:00 p.m. London time, the Canadian dollar traded at 1.3287 against the US dollar.
Shorter-term charts show the formation of a descending triangle as the pair doesn’t manage to form a fresh higher high. The November 20 high of 1.3327 will likely act as an important hurdle for buyers in the short run and we expect some selling pressure to arise in the lower 1.33s.
To the downside, the November 22 low of 1.3254 could provide some support for the greenback, the break of which could push the price to the lower 1.32s.