USD/CAD aims stability above 1.3800 amid multiple tailwinds

• USD/CAD aims to shift the auction above 1.3800 as oil price corrects further and the BoC keeps policy unchanged.
• The US Dollar falls marginally after upbeat US Q3 GDP data.
• Oil prices extend losses despite deepening Middle East tensions.

The USD/CAD pair aims for stability above the round-level resistance of 1.3800 in the New York session. The Loonie asset continues to move higher amid multiple tailwinds of declining oil prices, unchanged monetary policy by the Bank of Canada (BoC), and broader strength in the US Dollar.

The S&P500 opens on a bearish note amid deepening Middle East tensions. The US Dollar Index (DXY) delivered a small correction from 106.88 after the release of the upbeat Q3 Gross Domestic Product (GDP) data. The US economy grew by 4.9% in the July-September quarter from expectations of 4.1% on an annualized basis. In the April-June quarter, the US economy recorded a growth rate of 2.1%.

An upbeat US GDP carries the potential of elevating bets in favor of one more interest rate increase from the Federal Reserve (Fed) in the remainder of 2023. Apart from the US GDP data, upbeat Durable Goods Orders have also prompted hopes of more interest rates from the Fed. New orders for core goods grew at a stronger rate of 4.7% in September versus expectations of a 1.5% increase.

Meanwhile, the Canadian Dollar faces an intense sell-off as the Bank of Canada (BoC) kept interest rates unchanged at 5% on Wednesday. BoC Governor Tiff Macklem kept doors open for further policy-tightening citing that overall inflationary pressures have increased and consumer inflation could remain above the desired target of 2% for another two years.