Until recently, the possibility of a 0.25% rate increase on October 25 was high. However, a recent report indicating lower-than-anticipated inflation in September has weakened that possibility.
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However, bulls have the upper hand since this is happening above the 22-SMA. Therefore, the price will likely break above the 1.3701 resistance level in the coming week. Such a move would lead to a retest of the 1.3800 resistance level. Moreover, this would signal a continuation of the bullish trend as the price would make a higher high.
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Additionally, the Canadian dollar weakened as oil prices settled lower. This decline followed the release of two US hostages by the Islamist group Hamas in Gaza. Consequently, there is hope that the Israeli-Palestinian crisis might de-escalate without spreading and disrupting oil supplies.
Next week’s key events for USD/CAD
The market participants will keenly monitor the BoC policy meeting next week. They will also receive data from the US, including GDP and durable goods orders. Notably, a Reuters poll of economists suggests that the Bank of Canada will maintain its interest rates at 5.00% for at least six months.
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USD/CAD ended the week slightly higher as the Canadian dollar weakened against the dollar. Notably, a decline in Canada’s retail sales led to the weakening of the Canadian dollar. It solidified expectations that the Bank of Canada will maintain its current interest rates next week.
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