USD/CAD treads water around 1.29 as FOMC awaited
- Buck gathers strength on upbeat employment data.
- Rising crude oil prices help the commodity-linked loonie show resilience.
- Manufacturing sector in Canada loses momentum.
Following yesterday's strong upsurge, the USD/CAD pair is having a difficult time extending its gains on Wednesday as investors are refraining from making large bets ahead of the FOMC meeting. At the moment, the pair is trading at 1.2902, up 0.1% on the day.
According to today's data released by the ADP, the private sector employment in the U.S. increased by 235K on a monthly basis in October and surpassed the market expectation of 200K. Fueled by the robust data, the US Dollar Index pierced above its recent channel and advanced to a new 2-day high at 94.76. At the moment, the index is at 94.74, adding 0.3% on the day. Canadian data on Tuesday revealed that the manufacturing sector growth in the country eased in October with the Markit PMI data dropping to 54.3 from 55.
- Markit: Growth in the Canadian manufacturing sector showed signs of easing in October
- US: Private sector employment increased by 235,000 jobs from Sep to Oct - ADP
On the other hand, the barrel of West Texas Intermediate continues to trade near the $55 handle, gaining 1% on the day, and allowing the loonie to limit its losses against its peers. The EIA is going to release its weekly crude oil inventory report later in the session, which could be the next catalyst for crude oil prices.
The FOMC is also going to release its monetary policy statement and the interest rate decision in the session. However, ahead of the December meeting, markets don't expect the Fed to announce any changes to its policy. Moreover, there won't be a press conference after the announcement, which could limit the market reaction.
- FOMC Preview: 7 major banks expectation from November meeting
Technical levels to consider
The initial resistance for the pair could be seen at 1.2915 (Oct. 27/31 high), 1.2970 (200-DMA) and 1.3010 (Jul. 7 high). On the flip side, supports align at 1.2820 (Oct. 31 low), 1.2780 (Oct. 26 low) and 1.2700 (psychological level).