25.10.2019: USD braced for major events next week (USDХ, USD/CAD)

25.10.2019: USD braced for major events next week (USDХ, USD/CAD)


The US dollar opened the North American session with mixed trading against some rival currencies. Besides, the greenback has been trapped in narrow ranges against other major currencies. Such minor fluctuations mean that traders are leaving for the weekend pausing for thoughts ahead of the Fed’s policy meeting and a
series of crucial economic data from the US. The US dollar is not sending clear-cut signals of a trend reversal despite some recent weakness. The greenback could close this week with gains. At present, there are no drivers for sharp price swings. Investors do not expect too much progress in the trade relations between the US and China. However, there is a strong likelihood of a rate cut by the Federal Reserve. Meanwhile, the US dollar index is trading at near 97.69. US Vice President Mike Pence adopted a hard line in a speech on Thursday. He said that over the recent year Beijing had done nothing to improve economic relations with Washington. Beijing responded aggressively. At the same time, the policymaker indicated that the White House is interested in the fruitful cooperation with China and respects Chinese leaders. Market participants preferred to take no notice on such harsh remarks. The new week will shed light on other issues apart from the US – China trade conflict. Traders are anticipating the Fed’s policy meeting and crucial data on the US labor market. The US central bank is widely expected to ut the official funds rate by 25 basis points. Besides, traders are eager to find out forward idance until the year end and for the next year. The market has already priced in the rate cut at the October policy meeting. If the rate-setting committee drops a hint about further monetary easing, the US dollar will give a bearish response. The Canadian dollar has been extending strength over the two recent weeks. The loonie finds support from several factors, including growing oil prices. The USD/CAD pair has prospects for a further decline. The loonie will be able to assert strength if the US and Canada manage to avoid recession, thus boosting appetite for risk. However, Canada created one of the largest bubbles in terms of private lending. That’s why any step towards a credit crisis and recession could disrupt the rally of the Canadian dollar which has got stuck at near 1.30. The question is still open whether the USD/CAD pair will be able to go below the level of 1.30. The pair is set to trade under higher volatility amid the jam-packed economic calendar next week. Apart from the Federal Reserve, the Bank of Canada is also due to announce its policy decisions.

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