For the third day this week, the Canadian dollar has posted strong gains. In Thursday’s North American session, USD/CAD is trading at 1.3052, down 0.63% on the day. The Canadian dollar has climbed 2.2% this week and earlier today it touched its highest level since September 1st. On the employment front, US unemployment claims rose to 751 thousand last week, down from the previous reading of 758 thousand (revised from 751 thousand). This figure was higher than the forecast of 740 thousand. On Friday, both the US and Canada will release key employment data, so investors should be prepared for movement from USD/CAD.
Federal Reserve expected to maintain policy
The Federal Reserve policy meetings are usually under intense market scrutiny, and often trigger movement in the financial markets. However, today’s meeting is taking place in the shadow of the US election on Tuesday. With a winner yet to be declared, the election has transfixed the US public and the financial markets.
At today’s Fed policy meeting, we can expect more of the same from FOMC members, with no change in interest rates. Fed Chair Powell will host a press conference later today, but he finds himself in the unenviable position of speaking in the midst of a contested presidential election. Powell will aim to keep a low profile and may opt not to make any comments about the need for government stimulus, given that it remains unclear which party will control the Senate. It’s widely expected that a fiscal stimulus package will be put together early sometime in 2021, but the size of the package will depend on the composition of the Senate. If the Republicans win the Senate, the size of the stimulus package will be much slimmer than if the Democrats are in charge.
- There is resistance at 1.3257, followed by resistance at 1.3381
- USD/CAD is testing support at 1.3053. This is followed by support at 1.2973
- USD/CAD crossed below the 50-day MA earlier in the week, and the pair continues to head lower