USD/CAD - Canadian Dollar Inches Higher

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The Canadian dollar traded sideways in an uneventful overnight session. U.S. markets are closed for Thanksgiving Day celebrations today, and many workers take Friday off as well. That was all the excuse traders in other regions needed to refrain from getting involved in markets. That gave them time to digest yesterday’s U.S. economic reports and analyze the Federal Open Market Committee minutes from the November 3 meeting.

Yesterday, the U.S. released a variety of economic data that showed the U.S. recovery was accelerating. Jobless claims fell to a 52-week low, Q3 Gross Domestic Product rose 2.1% y/y, Durable Goods orders were steady, and consumers were spending.

Later, the FOMC minutes revealed policymakers were worried about inflation, and they would be "prepared to adjust the pace of purchases if warranted by changes in the economic outlook." The minutes also noted that a rate increase could occur "sooner than participants currently anticipated."

The market reaction to the minutes was underwhelming, mainly because many Fed officials have made similar remarks in speeches and interviews since the FOMC meeting.

Saudi Arabia and Russia did not seem pleased with the announcement that China, the U.S., the U.K., South Korea, and Japan would tap the Strategic Petroleum Reserves to help alleviate high oil prices. The Saudis and Russians suggested they may pause planned production increases. Oil prices firmed on the news, with West Texas Intermediate (WTI) rising from $75.27/barrel on Tuesday to $78.62 overnight.

The oil price gain underpinned the Canadian dollar. USD/CAD dropped from $1.2708 Wednesday to $1.2643 overnight. The intraday bias is negative, but the USD/CAD uptrend from October is intact while prices are above $1.2550.

Wall Street had a choppy session Wednesday but managed to turn losses into gains by the end of the day. The major Asia equity indexes followed suit and closed in positive territory. European equity markets are modestly higher as well.

EUR/USD is trading with a negative bias in a $1.1202-$1.1229 range. The rise in restrictive measures due to increased coronavirus cases in many European regions is weighing on prices. Sweden’s Riksbank left interest rates unchanged as expected, and suggested rates would remain unchanged until late in 2024. That view mirrors the European Central Bank guidance.

GBP/USD and USD/JPY traded in narrow ranges, with direction dictated by broad U.S. dollar sentiment. AUD/USD and NZD/USD are trading at overnight session lows.

There are no Canadian economic reports today.

Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
Learn how KnightsbridgeFX can help you save up to 2% when buying or selling US dollars compared to your Canadian bank’s rates – click here to compare bank rates