By Ketki Saxena
Investing.com -- The Canadian dollar strengthened modestly against its US counterpart today. The greenback weakened across most major currencies on a slew of negative economic data and Fed minutes, which raised expectations for a slowdown in the pace of Fed rate hikes.
The USD/CAD pair trended downwards on broad-based US weakness, rather than strength in the loonie. The commodity-linked Canadian dollar weakened against all other G10 currencies as oil prices slid.
Early in the North American session, and prior to the release of the Fed minutes, the loonie was the only G10 currency to lose ground against the U.S. dollar.
The US dollar weakened early in the North American session following a slew of US economic data, (including durable goods orders, claims, new home sales, and final Michigan sentiment. However, it was the US Manufacturing PMI - that widely missed expectations - that most weighed on the greenback.
The US dollar weakened further following the release of the Fed’s minutes, at which the central bank indicated it would “soon” slow the pace of its rate hikes. Markets now expect a 50 bps move in December after four consecutive 75 bps hikes. The minutes also noted that monetary policy is approaching a “sufficiently restrictive” level.
Despite the rebounding risk sentiment and rally in equities, the commodity-linked loonie was pressured by a slide in oil prices as worries of Chinese demand destruction, lower supply due to Russian oil caps, and a larger-than-expected drop in US inventories.
On a technical level, analysts at FX Street note the USDCAD traded to a new low today and centred within the 100 and 200 hour moving average.
When it comes to trading the pair, the analysts recommend “On the downside, the 200 hour moving average comes in at 1.33427. On the topside the 100 hour moving average and 38.2% retracement comes in at 1.33916. Getting outside those ranges and staying outside those ranges will be the next clue that traders will be looking for to determine the next shove – higher or lower."
The US celebrates Thanksgiving tomorrow, and a short trading day on Black Friday. Price action is likely to be limited this (almost) long weekend.