us-dollar-bank-notes-jar - USD

The US dollar continued to trade inside a well-defined range against the Canadian dollar in a slow holiday trading session in North America, reaching an intraday high of 1.3308.

The Canadian dollar picked up some support recently after the GDP and RMPI reports matched market expectations.

The real gross domestic product rose 0.1% in September, largely on the wings of a resilient service sector. Services increased by 0.2%, outpacing the growth in the goods sector of 0.1%.

Wholesale trade gained 0.9% in September, which is well above the 1.2% contraction in the previous month. The construction sector and all of its subsectors also showed a healthy increase of 0.6%, while weaker international trade volume weighed on the rail transportation sector which had a 7.2% contraction in September.

The RMPI, or Raw Materials Price Index, fell by 1.9% in October which was in line with market forecasts. The decrease in the index can be attributed to lower prices for crude oil (down 5.4%), while crop and animal products rose by 1.9% and 1.3%, respectively.

The Canadian dollar rose against the US dollar after the reports as markets were likely expecting a larger drop in the GDP numbers, especially after the Bank of Canada trimmed growth forecasts at their last meeting. The Canadian dollar traded at 1.3302 against the US dollar, as of 1:50 p.m. London time.

The US dollar remains well bid but continues to trade inside the well-known range between the mid 1.32s and lower 1.33s. Further upside potential seems limited at the moment, especially as a 30% probability of a BoC rate cut in January still looks quite elevated given the economic reports. To the downside, the November 18 low of 1.32 remains an important support level to watch out for.


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