- The US dollar rebounds from 1.3685 and returns to 1.3775.
- The Canadian dollar loses ground on the fall in oil prices.
- USD/CAD will continue to appreciate towards 1.40 — MUFG.
The US dollar has rebounded strongly after hitting session lows at 1.3685 earlier on Thursday. The pair strengthened as risk appetite triggered by the resignation of British Prime Minister Liz Truss moderated, turning positive on the daily charts and reaching the 1.3775 area so far.
Canadian dollar weakens on falling oil prices
Crude Oil prices, which had rallied earlier today, underpinning the commodity-linked loonie, are losing ground in US Thursday afternoon trading. WTI oil has fallen almost 3%, reaching prices below $85.00.
In addition, the market has shifted its focus to the upcoming Federal Reserve monetary policy meeting, after the effect of Truss’s resignation has subsided. The Fed is expected to raise rates by 0.75% for the fourth time in a row in November, which is acting as a tailwind for the US dollar.
On the macro front, US data has been quite positive on Thursday. Initial jobless claims rose and disappointed expectations in the week of October, while existing home sales declined less than expected.
USD/CAD is expected to move towards 1.40 — MUFG
MUFG FX analysts see risk skewed to the upside, with pair targeting 1.40: “It is expected that the BOC end your cycle of rate hikes before the fedpartly reflecting expectations that the Canadian economy will be more sensitive to rate hikes than the US, given that household debt is much higher in Canada (…) We expect USD/CAD to remain approaching 1.4000″.
Technical levels to watch
Source: Fx Street
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