Canadian Dollar stumbles back on US PMI market reaction

• Canadian Dollar falls back as investors pile into USD once more.
• Crude Oil extends Monday’s losses, evaporating CAD support with it.
• The Bank of Canada is due for its latest rate statement on Wednesday.

The Canadian Dollar (CAD) has slipped back into its lowest bids in almost three weeks against the US Dollar (USD) as broad-market flows reverse direction and pile back into the Greenback following a bumper reading for the US Purchasing Managers’ Index (PMI) that soundly thumped market expectations.

The Bank of Canada (BoC) is set to announce its latest rate call on Wednesday, and Loonie traders will be looking for the Canadian central bank to hold their reference rate at 5% while leaving the way open for more potential hikes to come later on. Market participants expect little change in the BoC’s forward guidance as Canadian policymakers grapple with a domestic economy that is seeing flagging growth indicators but still high inflation on the back of soaring energy prices.

Crude Oil prices are seeing a downside snap on Tuesday, with West Texas Intermediate (WTI) adding to Monday’s decline. The oil-backed Loonie is seeing its supportive base go up in smoke as crude barrels backslide, pushing the CAD into its lowest prices against the USD since October 5.

Daily Digest Market Movers: Canadian Dollar slips as broader market picks up the Greenback

• CAD fumbles to an almost three-week low as investors bid the USD.
• US October PMIs beat the Street, climbing over Wall Street’s forecasts to chalk in gains for the productivity indicator.
• The US Manufacturing PMI printed at a flat 50 versus the expected 49.5 decline from the previous 49.8 reading.
• The US Services PMI gave an impressive reading, coming in at 50.9 and handily vaulting over the forecasted 49.9 against September’s 50.1.
• The dual PMI beats sent the Composite PMI back to 51, its highest reading since July.
• Crude Oil continues to slide, dragging down CAD support with it.
• WTI barrels are down over 7.5% from Friday’s peak.
• BoC Preview: keeping rates on hold and the prospect of further hikes alive

Technical Analysis: Canadian Dollar gives up more ground as investors favor the US Dollar, USD/CAD taps 1.3755

The Canadian Dollar (CAD) is down almost 0.7% against the US Dollar (USD) in Tuesday’s trading session as markets go broadly USD bullish, taking the USD/CAD pair to its highest bids in almost three weeks.

The USD/CAD pinged 1.3755 on Tuesday after reversing direction from an intraday low of 1.3661. The next immediate barrier for USD/CAD bulls will be October’s early high of 1.3785, while the floor for sellers currently sits at the last swing low near 1.3569.

The US Dollar has gained nearly 5% against the Canadian Loonie since July’s low point near 1.3090, and the USD/CAD continues to find technical support from the 50-day Simple Moving Average (SMA) currently lifting into 1.3600.

An extended rally will see the USD/CAD set for a challenge of 2023’s highs at 1.3862, while a full bearish reversal will find the floorboards near the 200-day SMA currently parked just south of 1.3500.

USD/CAD Daily Chart