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Canadian Dollar Declines on Crude Prices, Soft Risk Sentiment,

Published Nov 16, 2023 18:03
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By Ketki Saxena

Investing.com -- The Canadian dollar declined against the USD today as sentiment turned risk-off, snapping a two day win streak after the US inflation-driven rally.

With markets widely expecting the Fed has reached its terminal rate, weak US economic data drove fears of a less than soft landing for the world’s largest economy.

US Initial Jobless Claims rose to their highest level in nearly two years,  while US Industrial Production also declined by more than expected. 

Market sentiment pressured equities and the risk-sensitive loonie, as did crude prices, which hit 4-month lows on stronger-than-expected US crude stocks, and expectations of a slowdown in Chinese oil refinery throughput.

Analysts at Scotiabank (TSX:BNS) note, “Soft stocks and crude are minor constraints on the CAD in the short-run but some improvement in short-term yield differentials in the CAD’s favour this week rather suggest scope for a little more strength.”

The US dollar meanwhile traded essentially flat against a basket of currencies. 

On a technical level for the pair, analysts at FXStreet note, “The early week’s declines saw the USD/CAD ease into a near-term low of 1.3654 before getting a clean bounce off of the 50-day Simple Moving Average (SMA) and a rising trendline drawn from July’s lows near 1.3100.”

“ Long-term technical support comes from the 200-day SMA sitting near the 1.3500 handle. A bullish extension for the USD/CAD will see bidders looking to take another run at cracking the 1.3900 handle at November’s high bids.”

Canadian Dollar Declines on Crude Prices, Soft Risk Sentiment,
 

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