USD/CAD stays heavy near 1.3250, focus on BOC’s Macklem
- USD/CAD probes weekly low while extending Wednesday’s losses from 1.3340.
- US dollar drops versus major currencies as stimulus hopes dim safe-haven demand.
- WTI avoids further losses despite downbeat inventories.
- US Jobless Claims, risk catalysts also occupy traders’ watch list.
USD/CAD seesaws around intraday low near 1.3250 as European traders brace for Thursday. Alike other major currencies, the Canadian Dollar (CAD) also benefits from the broad US dollar weakness amid risk-on mood. Also favoring the pair sellers are the mild price gains of Canada’s main export item crude oil.
Global market sentiment stretches the Wednesday’s optimism as details from the US Vice Presidential (VP) Debate suggest that Democrats and Republicans are both inclined to pump the markets. US President Donald Trump’s optimism for the coronavirus (COVID-19) vaccine and readiness to consider the Democratic counteroffer for stimulus, after rejecting it on Tuesday, add strength to the trade positive environment.
Not only the US but policymakers from New Zealand and Japan also favored easy money and rekindled hopes of further stimulus.
With this, S&P 500 Futures join the Asia-Pacific shares in portraying the market’s rush towards the risk, which in turn weighs on the US dollar index (DXY) for the second consecutive day. The DXY is currently down 0.07% intraday while nearing the day’s low of 93.54.
WTI also benefits from investor’s upbeat mood while defying higher than expected 0.294M inventory levels from the US Energy Information Administration (EIA) to 0.501M for the week ended on October 02. Additionally, Saudi Arabia’s increase in oil prices for Asia and fears of another hurricane in the US offer extra strength to the black gold.
Looking forward, the Bank of Canada (BOC) Governor Tiff Macklem is to take part in the Global Risk Institute's online summit and his comments on Canada’s further monetary policy need will be closely observed. In his latest remarks, BOC’s Macklem gave importance to the CAD price level while showing readiness for short-term easing to anchor household inflation expectations. Furthermore, the weekly US Initial Jobless Claims, expected 820K, will join the risk catalysts like virus updates, stimulus news and challenges to the commodity prices for extra direction to the USD/CAD traders.
Technical analysis
50-day SMA, at 1.3235 now, probes the downside break of the five-week-old support line. On the contrary, bulls remain worried unless crossing September month’s high of 1.3420.