CANADIAN DOLLAR RETREATS AHEAD OF THE BOC INTEREST RATE DECISION

The relentless rally of US equities continued in the overnight session as investors remained optimistic about the earnings season. The S&P 500 soared to a record high of $4,570 while the Dow Jones rose to more than $35,742. Some of the companies that have reported strong results this week were Facebook, Microsoft, and HSBC. The rally continued even as many companies cite the rising cost of doing business as supply shortages remain. Some of the companies that will publish their results today will be Coca-Cola, Thermo Fisher, ADP, Fiserv, Bunge, and Garmin among others.

The US dollar index held steady after the US published strong economic data. Numbers by the Conference Board showed that the country’s consumer confidence bounced back in October. Consumer confidence rose from 109.8 in September to 113.8 in October. This increase was slightly better than the median estimate of 108.3. The index also reacted to the latest new home sales numbers. Later today, the US dollar will react to the latest core durable goods order numbers from the US.

The Canadian dollar declined slightly against the US dollar ahead of the Bank of Canada interest rate decision scheduled for later today. Analysts expect that the bank will leave interest rates unchanged at 0.25%. Analysts polled by Reuters estimate that the next rate hike will happen in the third quarter of the coming year. However, the bank will continue scaling back its asset purchases as the economy improves and as inflation remains stubbornly high. Oil prices have also helped to support the Canadian economy. Crude oil prices have risen to the highest level in more than 7 years.

USDCAD

The USDCAD rose to a high of 1.2387 ahead of the BOC decision. The pair managed to move above the 25-day and 15-day moving averages while the MACD has moved above the neutral level. It is also at the middle line of the ascending channel on the hourly chart. Therefore, the pair will likely keep rising as bulls target the key resistance at 1.2450.

EURUSD

The EURUSD pair declined to a low of 1.1590 after strong US consumer confidence data. On the four-hour chart, the pair moved below the key support level at 1.1620. This price was along the neckline of the triple top pattern. It also declined below the 25-day moving average while the Relative Strength Index has also fallen. Therefore, the pair will likely keep falling with the next key support being at 1.1500.

XAUUSD

The XAUUSD pair declined sharply after the latest consumer confidence data. It declined to a low of 1,782, below this week’s high of 1,814. Its lowest level on Tuesday was along the rising trendline that connected the lowest levels since September. It also moved above the 25-day moving average and is between the 23.6% and 38.2% Fibonacci retracement level. Therefore, a bearish breakout will be confirmed if the pair manages to move below the ascending trendline.