The Canadian dollar has posted slight losses on Wednesday, erasing most of the gains seen on Tuesday. In the North American session, USD/CAD is trading at 1.3272, down 0.32% on the day.
Canada Ivey PMI disappoints
Canada’s Ivey PMI posted a reading of 54.3 in September, a sharp drop from the August reading of 67.8 points. The reading was well off the forecast of 64.5 points. This points to a softer pace of expansion than expected in September. Still, investors didn’t appear concerned over the slowdown, as the Canadian dollar had a winning session on Tuesday. Recent economic data indicates that Canada’s economy is in recovery mode, but the Covid-19 pandemic is still hampering economic activity.
All eyes on Federal Reserve
The Federal Reserve will be on centre stage later in the day, with the release of the FOMC minutes (18:00 GMT). The Fed recently modified its stance on inflation to “average inflation targeting”, which means that the Fed is no longer committed to raising interest rates if inflation overshoots the two percent level. At last month’s policy meeting, the Fed reiterated that it does not plan to hike interest rates before 2023, and this has made the US dollar less attractive for investors. If the minutes reiterate the dovish tone of the policy meeting, the greenback could come under pressure in the North American session.
- 1.3267 is under pressure in support. Below, there is support at 1.3218
- 1.3341 is the next resistance line. Close by, there is resistance at 1.3366
- The pair broke below the 20-day MA line on Tuesday, which signifies a downward trend
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