CAD climbs after FOMC, retail sales will follow
The Canadian dollar rallied strongly during Thursday’s session. Currently, USD / CAD is trading at 1.2676, down 0.76% on the day. We could see further moves for the pair in the North American session, as Canada releases retail sales reports for July.
Dovish FOMC increases risk appetite
The highly anticipated FOMC meeting delivered the goods, in a way. Markets were eagerly awaiting the Fed to provide clarification on the tapering, and there was even hope that policymakers could provide a timeline to reduce bond purchases. After the meeting, Fed Chairman Jerome Powell said the Fed could decline in November if it is happy with the economy’s performance. Additionally, the dot plot showed that two other members were forecasting a rate hike in 2022.
The market reaction is that the Fed is in no rush to raise interest rates, as they still believe that inflation will be transient in 2022. The Fed could commit to gradually reducing its interest rates in the future. months, but a rate hike is still underway. road. This increased risk appetite, lifting minor currencies like the Canadian dollar.
In his remarks, Powell mentioned the two key areas the Fed watches before a downturn – inflation is well above the Fed’s target of 2%, while unemployment, which has fallen to 5%. , 2%, still has some way to go before reaching the Fed’s target. Markets will be closely scrutinizing upcoming inflation and jobs numbers, which will be major factors in the Fed’s decision on when to pull the trigger.
USD / CAD Technical
- On the upside there is resistance at 1.2829. This is followed by resistance at 1.2885
- The support at 1.2659 is fluid. Below there is support at 1.2545
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