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USDCAD Market Update

11/30/2022 2:29 PM

This week, the USD/CAD pair rose and reached four-week highs around 1.3645.

Pressure on the Canadian currency is exerted by the release of the latest data on the country's Q3 gross domestic product (GDP): the indicator rose by 2.9%, exceeding the 1.5% expected by the market, but the positive dynamics were carried out due to exports, which increased by 2.1 %, while domestic demand fell by 0.6%. Experts see it as a sign of the coming economic downturn, which, according to the Bank of Canada, may come in the fourth quarter of this year and last until the middle of next. Most investors believe that fears of excessive pressure on the economy will force the regulator to adjust the interest rate by only 25.0 basis points at the December meeting, which also weakens the position of the Canadian dollar against its main competitors.

The US currency looks preferable, as US Federal Reserve officials convince the market that a likely slowdown in monetary policy tightening in December does not end the fight against inflation. So, yesterday, the need to further increase and maintain the interest rate at a high level until 2024, stated the President of the Federal Reserve Bank (FRB) of New York, John Williams, and the head of the St. Louis FRB, James Bullard. At the same time, the growth peak of the indicator may be 5.00–5.25%. Today, additional details about the future policy of the regulator can be reported by its head, Jerome Powell, who will make a report on the prospects for the US economy and the labor market at the Brookings Institution event.

The trading instrument reversed at the weekly highs and is now at 1.3560 (correction 23.6%), consolidation above which will continue to grow to 1.3671 (Murrey level [8/8]), 1.3880 (correction 0.0%), 1.3975 (region of October maximums). The key "bearish" level is 1.3427 (the middle line of Bollinger bands, Murrey level [7/8]). After its breakdown, the decline can resume to 1.3185 (Murrey level [6/8], Fibonacci correction 60.0%), 1.3045 (61.8% Fibonacci retracement).

Technical indicators do not give a single signal: Bollinger bands are directed downwards, but Stochastic reversed upwards, and MACD is preparing to move into the positive zone, formed a buy signal.

Resistance levels: 1.3560, 1.3671, 1.3880, 1.3975. | Support levels: 1.3427, 1.3185, 1.3045.

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