- Dovish Fed November minutes weigh on USD and boost CAD.
- The US S&P Global Purchasing Managers Index has entered recession territory, which means that the US economy is decelerating rapidly.
- USD/CAD Price Analysis: Downside, focus on head and shoulders target 1.3030.
Canadian Dollar (CAD) to US Dollar (USD) Continue The rise was driven by a variety of factors, mainly the US Federal Reserve (Fed) meeting minutes were considered slightly dovish, with the committee preparing to slow down the pace of rate hikes. Coupled with the PMI entering recessionary territory, the US (US) economic outlook is gloomy, weighing on the dollar. At the time of writing, USD/CAD is trading at 1.3338, 0.17% below its opening price Fed officials prepare to ease rate hikes, dollar remains weak Sentiment remains Markets were upbeat amid low volumes over the U.S. Thanksgiving holiday. On Wednesday, the Federal Reserve Open Market Committee (FOMC) released the minutes of its November meeting, in which it said that “a large majority of participants felt that a slowdown in rate hikes may be appropriate soon,” opening the door for investors seeking higher risk. Greenlighted assets. That said, traders should be aware that policymakers have expressed “uncertainty” about how high rates need to go, which will depend on the data. The same minutes report said recession risks increased, with a 50% chance of a U.S. recession as officials acknowledged Growth risks are skewed to the downside. Elsewhere, a slew of mixed economic data from the U.S. on Wednesday saw the S&P Global Purchasing Managers Manufacturing, services and composite indexes entered recessionary territory. Subsequently, the University of Michigan (UOM) consumer sentiment index remained positive at 56.9, lower than the initial reading but higher than expected. Inflation expectations remained largely unchanged. Earlier, the number of people filing for unemployment benefits last week exceeded expectations, suggesting that the labor market is easing. Meanwhile, U.S. durable-goods orders topped expectations, suggesting consumers’ resilience in times of high inflation and high borrowing costs. Meanwhile, the U.S. dollar index (DXY), which measures the greenback’s value against a basket of currencies, fell 0.23% to 105.857, ending the day at 200. Exponential Moving Average (EMA) of 105.272. A break above the 200-day SMA would intensify the test of 100.000. Governor of Canada (BoC) Tiff Macklem is in Parliament to testify on the October Monetary Policy Report. McCollum did not comment on any new news. He stressed the need to balance the risks of over-tightening with the risks of under-tightening. He said they expect interest rates to rise further, adding that inflation in Canada remains high and expanding, reflecting higher prices for goods and services
USD/CAD Price Analysis: Technical Outlook
USD/CAD resumed its downtrend after testing the head and shoulders neckline on Monday, but failed to break the neckline to keep the chart pattern in play. USD/CAD is trading below 1.3400 following the release of the November Fed meeting minutes. However, the lack of liquidity due to the US holidays kept USD/CAD sideways. However, the path of least resistance for USD/CAD is to the downside. Therefore, the first support level for USD/CAD is 1.3300. A break below would expose the 100-day exponential moving average (EMA) at 1.3264, then 1.3200.
