- USD/CAD rises but remains below all-time highs around 1.3730, forming a doji.
- US economic data was positive, supporting the current Fed policy.
- US consumer confidence improved, supported by lower energy prices.
The USD/CAD rose during the American session, but slightly below the all-time high at 1.3808, due to a risk appetite boost, which capped the dollar’s rise. However, late in the day, as the Dollar Index (DXY) shows, it regained some ground above the 114.00 thresholds, underpinned by further hawkish Fed comments.
At time of writing, USD/CAD is trading at 1.3734, up 0.02%, after bottoming around 1.3639 earlier in the session.
US economic data released during the day was better than expected, justifying the need for further rate hikes. The US Commerce Department reported that August Durable Goods Orders fell 0.2%, but were better than the 0.3% contraction estimated. At the same time, the US Census Bureau revealed that new home sales for the same period increased by 0.685 million, beating forecasts of 0.5 million.
On the other hand, the BC Consumer Confidence improved in September for the second consecutive month, standing at 108 against forecasts of 104.6. Lyn Franco, Director of Economic Indicators at the Conference Board, stated: “Consumer confidence improved in September for the second month in a row, supported in particular by employment, wages and lower gas prices.”
Separately, other Fed policymakers, led by Evans of the Chicago Fed, said rates should hit the 4.50/4.75% range, higher than initially thought. Evans added that a “recession-like” scenario is not in sight and echoed his colleague, Susan Collins, in saying the labor market should ease to curb inflationary pressures.
Later, the president of the St. Louis Fed, James Bullard, stated that the US has “a serious problem with inflation”, while adding that he expects rates to end in 2022 at around 4.5%, which it would slow down the economy and slow down inflation.
The lack of Canadian economic data left traders adrift on US dollar dynamics and market sentiment. On Wednesday, the US economic docket will feature pending home sales, with some Fed policymakers, Bostic, Bullard, Bowman Barking and Evans giving statements.
USD/CAD Key Technical Levels
Source: Fx Street
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