After having softened considerably on pared bets as to the timing of a Federal Reserve rate hike, the US Dollar has gained a little momentum after home sales data printed above expectations. A lack of Canadian economic data has seen the ‘Loonie’ (CAD) depreciate against the majority of its most traded currency rivals. However, improved market sentiment after Chinese data erred toward the positive has slowed the Canadian Dollar downtrend.
The US Dollar to Canadian Dollar exchange rate is currently trending in the region of 1.1236.
On Monday the US Dollar declined against most of its major peers after trader risk-sentiment took a back seat. With the commodities market firming up a little and with geopolitical concerns easing, the US Dollar was no longer propped up by its safe-haven qualities.
The Canadian Dollar, meanwhile, strengthened against its rivals on Monday after wholesale sales increased from -0.2% to 0.2% in October. The improved market sentiment also aided a ‘Loonie’ uptrend.
The US Dollar to Canadian Dollar exchange rate has fallen to a low today of 1.1206.
On Tuesday morning the US Dollar softened against most of its major rivals after traders pared bets as to the timing of Federal Reserve monetary policy normalisation. Futures traders estimated a Fed interest rate increase at 46% likelihood by October 2015, down from 51% at the close of last week.
‘The Dollar will probably struggle a little bit at least until after the Fed meeting next week,’ said Ray Attrill, global co-head of currency strategy at National Australia Bank Ltd. in Sydney.
However, the US Dollar has firmed up a little after domestic home sales showed a marked improvement. Existing Home Sales rose from by2.4% after declining by -1.8% the previous month despite the market consensus of an increase to only 1.0%.
A complete absence of Canadian economic data has seen the ‘Loonie’ generally soften against the majority of its currency competitors. However, given that market risk-sentiment has improved the downtrend has been slow.
US Dollar to Canadian Dollar Exchange Rate Volatility Forecast
There will be several important economic data publications pertaining to both the US and Canada on Wednesday.
US inflation data is a very important gauge of American economic standing and also has the potential to drive wider market movement. The yearly Consumer Price Index is forecast to tick lower from 1.7% to 1.6%.
The Bank of Canada makes their interest rate decision on Wednesday. Although it is incredibly unlikely that there will be any significant changes to monetary policy, those invested in the ‘Loonie’ will hope for at least an incremental step towards monetary policy normalisation.
The US Dollar to Canadian Dollar exchange rate has reached a high today of 1.1284.
UPDATE
The US Dollar to Canadian Dollar exchange rate is currently trending in the region of 1.1235.
After having surged following impressive home sales data, the US Dollar is trending higher against the Canadian Dollar. With important US inflation data due for publication later on Wednesday the USD/CAD exchange rate is likely to be volatile later in the day.
As traders await the Bank of Canada interest rate decision the Canadian Dollar is likely to soften gradually against the majority of its most traded currency peers.
