USD/CAD back above 1.3600 after another rebound from 1.3500
- USD/CAD about to end flat a volatile week.
- US dollar gains momentum on Friday despite risk appetite.
- Critical week ahead with FOMC and employment reports.
The USD/CAD is up for the second day in a row and moved further away from the one-month low it reached on Thursday below 1.3500. The pair is holding firm above 1.3600, about to end the week flat.
Loonie fails to break 1.3500 and retreats
Near the end of the week, USD/CAD is hovering around 1.3620/30, at the highest level in two days. The rebound from under 1.3500 reflects difficulties for the loonie to rise further and at the same time, that the dollar is not ready yet for a deeper correction, ahead of a critical week.
For the second time in October, USD/CAD managed to remain above 1.3500. The rebound so far has been limited. The next resistance stands at 1.3650 and above attention would turn to the 20-day Simple Moving Average at 1.3697.
After BoC, now FOMC and job data
Monthly GDP data in Canada came in above expectation with an expansion of 0.1% (consensus: 0%). “GDP registered slightly above expectations in August with a one tick increase. This rise was led by the services industry with gains stemming in part from retail and wholesale trade. The increase in retail outlays is likely to be short?lived as consumers contend with a decline in purchasing power and rising interest bills”, explained analysts at the National Bank of Canada.
After the surprise dovish rate hike from the Bank of Canada on Wednesday, attention is back on economic numbers. Next week, the Canadian employment report is due on Friday. Also, the US will release employment numbers for October.
The key event in the US will be the FOMC meeting. On Wednesday, the central bank is expected to announce a 75 basis points rate hike. Market participants will look for clues about the next steps of the Fed and those expectations will likely define the direction of the US dollar.