USD/CAD tumbles to 1-week lows as USD retreats further after Fed’s minutes
- US dollar extended losses after FOMC minutes.
- CAD having best day in months against USD.
- Higher crude oil prices and NAFTA talks added momentum to the Loonie.
The USD/CAD pair extended the decline following the release of the minutes from the latest FOMC meeting. It fell from 1.2730 to 1.2696, reaching the lowest level since November 13. The DXY tumbled to 93.10, 1-month low.
USD slide (main driver) continues after minutes
Today’s decline has been boosted by a decline of the greenback. The Dollar dropped ahead of the Thanksgiving holiday. The minutes were seen as tilted to the dovish side and triggered another round of USD selling.
According to the minutes, many participants saw it appropriate for the Fed to hike again in the near-term. But, with a rate hike in December fully priced in, market participants focus on the medium-term stance. The statement showed that many participants saw that low inflation could prove to be more persistent and that it could reflect a decline in inflation expectations. The tone of the minutes pushed the greenback further to the downside.
The loonie is about to post strong gains versus the US dollar for the second day in a row. Higher crude oil prices and also some optimism about the outcome of NAFTA talks after the fifth round of negotiations weakened further USD/CAD.
At the moment of writing, USD/CAD was trading at 1.2700/05, 130 pips below Tuesday’s high. The short-term tone now is clearly bearish. Price is back below the 20-day moving average that stands at 1.2760.
The pair appears to be headed toward November lows located at 1.2665; below that level the next support might be seen at 1.2590. On the flip side, resistance now might be located at 1.2750, 1.2775 (Nov 22 high) and 1.2820 (Nov 20 high).