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The Canadian dollar was almost unchanged on Tuesday, after starting the week with gains. USD/CAD is trading at 1.3260, up 0.04% on the day. On a fundamental level, Canada and the United States have published their respective trade balances for the month of August. Canada’s trade deficit narrowed slightly to C$2.4 billion from C$2.5 billion previously. In the United States, the trade deficit rose to $67.1 billion from $63.6 billion previously. Both exports and imports rose as the US economy continues to recover from the sharp decline at the start of the year.
Next – FOMC Minutes
Investors are keeping a close eye on the FOMC minutes, which will be released Wednesday at 6:00 p.m. GMT. The buzz around the Federal Reserve continues to be its recent change in monetary policy. The Fed’s stance on inflation is now “average inflation targeting,” meaning the Fed is no longer committed to raising interest rates if inflation rises above the 2% level. At the September policy meeting, FOMC members noted that they did not expect rates to rise until 2023, and predictably this soured sentiment towards the US dollar, which continues to struggle against the G-10 currencies. If the tone of the minutes echoes the dovish view that was expressed at the political meeting, the US dollar could find itself under pressure on Wednesday.
- 1.3242 is a weak support line. It is followed by support at 1.3227
- 1.3289 is the next resistance line. Above there is resistance at 1.3321. It is closely followed by the 20-day MA line, which remains relevant
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