The Canadian dollar has taken a pause in Wednesday trade, after showing strong gains on Tuesday. USD/CAD is almost unchanged, up 0.05% on the day. There are no Canadian events on the calendar this week, but the US released a host of events ahead of the Thanksgiving holiday on Thursday.
Canadian dollar jumps on bandwagon
The US dollar continues to lose ground, and the cyclical currencies took advantage of the dollar’s misery. The Canadian dollar joined in and posted strong gains of 0.74%, on Tuesday, its best one-day performance since November 3rd. There were no Canadian releases on Tuesday, so it was clearly a case of weakness in the US dollar rather than any strength in the Canadian currency.
The US dumped data on Wednesday, ahead of Thanksgiving. The numbers were mostly disappointing, but USD/CAD appears disinterested in the releases. Second-estimate GDP for the third quarter came in at 33.1%, confirming the initial release. Of course, this massive gain appears less impressive when one recalls that GDP plunged by 31.7% in the second quarter.
US initial unemployment claims rose for a second straight week, from 742 thousand to 778 thousand. This was much higher than the consensus of 732 thousand. Durable Goods Orders fell from 1.9% to 1.3%, but the core reading improved to 1.3%, up from 0.8% beforehand. Consumer data was soft, as Personal Spending and Personal Income both slowed in October. The busy day will wrap up with the minutes of the Fed’s policy meeting earlier this month. Investors will be interested in how policymakers view the economy and will be looking for hints of further easing in the near future. This event should be treated as a market mover, which could shake up the sleepy Canadian dollar.
- There is support at 1.3038. Below, there is a support line at 1.2982
- We find resistance at 1.3145, followed by resistance at 1.3196
- USD/CAD easily broke below the 10-day MA line on Tuesday