The Canadian dollar continues to post gains, as USD/CAD has dropped 0.80% this week. Currently, USD/CAD is trading at 1.3162, down 0.39% on the day. Earlier in the day, the pair touched a low of 1.3152, its lowest level since late January.
It’s a quiet day on the fundamental front, with no Canadian events. In the US, the only data was tier-2 construction numbers. Housing Starts improved from 1.19 million to 1.50 million, which marked a 5-month high. Building Permits improved to 1.50 million, up from 1.24 million beforehand. Both indicators were higher than expected.
Political deadlock weighs on US dollar
The US dollar continues to retreat against the major currencies. The gridlock in Washington, DC is only exacerbating matters. US lawmakers have been unable to reach an agreement on a fiscal stimulus bill, which is desperately needed to shore up a fragile US economy. The lengthy delay, which unsurprisingly is along partisan lines, is making investors nervous. As well, the Trump White House is sparring with the Democrats over mail-in voting, which is also taking a toll on the US dollar.
Fed minutes next
The Federal Reserve remains in accommodative mode and has kept interest rates close to zero as the economy struggles with the Covid-19 pandemic. The Fed releases the minutes of its August policy meeting on Wednesday. With the US showing some improvement in economic data, such as employment numbers, the tone of the minutes could be a market-mover for USD/CAD.
USD/CAD moved lower in the Asian session and steadied in European trade
- 1.3253 is the next resistance line. This is immediately followed by the 10-day MA line. Next, there is resistance at 1.3293
- USD/CAD broke through support at 1.3182 in the Asian session. The next support line is 1.3151
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