- USD/CAD posts the biggest weekly gain as the dollar runs up after the Fed policy.
- The Fed is not in a hurry to offer a further stimulus, affecting the bullish mood in risk assets.
- USD/CAD benefits from weak crude oil prices.
- Economic data eyed for additional triggers in the short-term.
USD/CAD scaled above 1.3200 as the Fed sounded more cautious than earlier regarding rate cuts and gave a lift to the quarterly economic projections. The pair was trading up by 0.40 Percent today, around 1.3230 during the pre-European session.
The USD/CAD surge is in-line with the affinity for the US dollar seen across the board. The pair was further benefited by the weakness in the CAD on account of oil-price weakness, like other commodity-linked currencies.
The caution by the Fed suggests a brake on the flow of easy liquidity, triggering disappointment for risk-on assets, a mood that continued today also.
The US dollar index is up by more than 0.33 Percent to touch 93.40 after touching 93.60, a one week high. Equities fell on the cautious optimism tone while the dollar strength dragged commodities.
Oil prices were further dented by the cautious mood ahead of the OPEC+ meeting, among the Organization of the Petroleum Exporting Countries and Russia. The black gold was trading around 39.89 dollars, down 1.27 Percent for the day. The mood was also soured by Trump’s dislike of WTO affinity to China, reigniting trade war fears.
Asia-Pacific stocks and US stock futures are down today by around one Percent – as indicated by major indices. The US 10-year Treasury yield is near 0.679 Percent, down by one basis point.
The US and Canadian economic docket today contain: Canada’s monthly ADP Employment Change for August expected at 901.8K against 1149.8K earlier; the US weekly Initial Jobless Claims predicted at 850K down from 884K previous. Traders will take a cue from these numbers for short-term direction in the USD/CAD.