The Canadian dollar’s recent advance stopped short of a key USD/CAD chart level in early Wednesday trading, while oil later pared gains that had offered the currency support.
FXStreet put the pair near 1.4050 in early European trading after it rebounded from the 1.4030 area. FXStreet analyst Haresh Menghani identified 1.4030 as the 50% retracement of the pair’s September-October rise. In his analysis, a move below that level would strengthen the case for further short-term U.S. dollar weakness. The break had not occurred in FXStreet’s early snapshot.
The Bank of Canada’s indicative daily average fell to 1.4054 Canadian dollars per U.S. dollar on Oct. 20 from 1.4097 on Oct. 19. A lower USD/CAD rate indicates a stronger Canadian dollar. Those daily averages do not measure Wednesday’s intraday trading.
Oil initially supported the Canadian dollar, FXStreet said, but the rise weakened as the session progressed. Reuters reported Brent crude up 27 cents at $109.04 a barrel by 10:50 a.m. ET (14:50 UTC), while U.S. West Texas Intermediate crude was down 11 cents at $97.72. Each benchmark had risen by as much as $2 earlier Wednesday.
FXStreet also cited expectations of higher U.S. interest rates as support for the dollar. An OANDA table dated Oct. 21 put the futures-implied probability of a rate increase at the Federal Reserve’s Oct. 27-28 meeting at 16.1%.
Menghani identified 1.3968 as the next support level if USD/CAD fell below 1.4030. That level is part of his chart assessment, rather than a price reached in FXStreet’s early trading snapshot.
The Fed is scheduled to meet Oct. 27-28. The Bank of Canada is due to announce its next rate decision and Monetary Policy Report on Oct. 28 at 9:45 a.m. ET.
