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The Canadian dollar continued to extend gains against the US dollar for the third consecutive day, as the Bank of Canada left interest rates unchanged at their monetary policy decision yesterday.
The central bank said that the economy is growing in-line with its October projection, with signs that the global economy is stabilizing and growth likely to edge higher over the next couple of years.
Apparent progress in trade talks between the world’s two largest economies led to a sell-off in safe-havens, including the US dollar. According to sources familiar with the talks, the US and China are moving closer to agreeing on an interim trade deal before the December 15 deadline, despite tensions over Hong Kong and Xinjiang.
While there are no market reports of note from the United States today, the Canadian trade balance narrowed slightly in October to $1.1 billion, beating market expectations of a $1.4 billion drop.
Higher oil prices also underpinned the Canadian dollar during the day. Brent crude was up around 0.41% at the time of writing on reports that OPEC was debating a production cut of 500,000 barrels a day to output.
The US dollar managed to pick up some support against the Canadian dollar after reaching an intraday low of 1.3158 earlier today. As of 3:25 p.m. London time, the USD/CAD pair traded at 1.3182.
The price broke below both the 1.3270 support and the 1.3190 support as markets became increasingly bullish on the Canadian dollar following the BoC rate decision.
To the downside, the November 5 low of 1.3115 could provide some buying pressure, followed by the October 29 low of 1.3042. To the upside, a retest of the lower range level of 1.3270 could be on the table before a renewed push lower.
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