- The US dollar, contained at 1.2350, is back near a week-long high at 1.2400.
- The dollar recovers after upbeat manufacturing and housing data.
- USD / CAD is expected to rally to 1.25 / 26 after BoC – Scotiabank.
The US dollar has ignored initial weakness and rallied from session lows at 1.2350 against its Canadian counterpart, returning to just below 1.2400 and turning positive on daily charts.
The dollar bounces off US data.
The dollar has rallied to make up lost ground after a soft performance during the Asian and European trading sessions. Better-than-expected US new home sales and strong performance from the Richmond Fed manufacturing index appear to have reactivated confidence in the US dollar, pushing the pair close to a week-long high of 1.2400. .
New home sales rose 14% in the US in September, hitting a six-month highest rate of 800,000 units and exceeding market expectations of 620,000 units sold. Additionally, the Richmond Fed Manufacturing Index improved to 12, from -3 in the prior month, with all components – shipping, new orders and employment showing progress. On the downside, house prices have risen disappointing expectations.
The loonie had risen shortly before, driven by rising oil prices and improving market sentiment thanks to strong corporate earnings. The CAD, however, remains heavy, with the market positioning for a dovish policy statement from the BoC later this week.
USD / CAD will appreciate towards 1.25 / 26 after the BoC – Scotiabank
Scotiabank’s currency analysis team expects the pair to advance further this week, with a subdued BoC adding to negative pressure on the CAD: risk of a closer smooth pedaling. Forward interest rate expectations could push the CAD lower in the short term. However, it is highly likely that the USD gains up to 1.25 / 1.26 will be met with a renewed USD offer. “
Technical levels
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