The U.S. Dollar is trading flat against the Canadian Dollar around the 1.4000 mark, with market participants looking ahead to potential developments in U.S.-Canada trade talks and next month’s pro-growth Canadian budget, according to analysts at Brown Brothers Harriman (BBH).
Lack of Direction Ahead of Key Events
BBH’s FX strategists noted that USD/CAD remains directionless near 1.4000, with technical support at 1.3961 (the 200-day moving average) and resistance at 1.4080 (the October 14 high).
They added that Canada’s August retail sales data, due at 1:30 p.m. London / 8:30 a.m. New York, is unlikely to trigger major market volatility.
According to a Statistics Canada advance estimate, retail sales rose 1.0% month-on-month in August, following a 0.8% decline in July.
Downside Risks for USD/CAD
Despite the current stability, BBH analysts highlighted that USD/CAD risks are tilted to the downside in the near term. This reflects optimism over a possible U.S.-Canada trade agreement next week and expectations of a pro-growth Canadian federal budget set to be unveiled on November 4.
