The Canadian dollar is slightly lower in Wednesday trade, as USD/CAD has dropped 0.19% on the day. Currently, USD/CAD is trading at 1.3144, down 0.18% on the day. Earlier in the day, the pair touched a low of 1.3133, its lowest level since late January.
Federal Reserve Minutes Ahead
Later on Wednesday, the Federal Reserve releases the minutes of its August meeting. The Fed has done its best to support the US economy in the severe circumstances of Covid-19, slashing rates close to zero and expanding QE. Investors will be keeping close tabs on the tone of the minutes. The Fed is projected to maintain a dovish tone, so if the minutes are more hawkish than expected, the US dollar could get a much-needed boost.
Also on Wednesday, OPEC members are holding a meeting to discuss easing production cuts. Oil prices have shown sharp volatility in recent months, as crude prices crashed close to USD11.00 in mid-April. However, oil has since made a strong recovery, as OPEC production cuts and stronger demand for oil have boosted prices to the USD42.00 level. Canada is a major oil producer, so any movement in oil prices could affect the Canadian dollar.
Canada’s inflation dropped in July, pointing to weaker economic activity. The headline reading fell to zero, down sharply from 0.8% beforehand. This missed the estimate of 0.4%. Core CPI declined by 0.1%, after a gain of 0.4% in June.
USD/CAD Technical
USD/CAD headed lower in the Asian trade and has steadied in European and North American sessions
- 1.3215 is the next resistance line. This is followed by resistance at 1.3263
- USD/CAD tested support at 1.3135 earlier in the North American session. The next support line is 1.3103, protecting the symbolic 1.31 level
