The Canadian dollar dropped fast, hit support, and rebounded furiously. It was not alone. Most of the G-10 major currencies saw similar price action, which occurred following U.S. Federal Open Market Committee meeting.

The Fed left interest rates unchanged. It wasn’t a surprise. The dot-plot interest rate forecast predicted rates would remain at current levels until sometime after 2023. Analysts took note of the change in guidance in the FOMC statement.  Adding to it, , U.S. reported that Initial Jobless Claims decreased to 860,000 while Continuing Jobless Claims declined to 12.6 million. While Continuing Jobless Claims report was better than expected, the general situation in the U.S. job market remains challenging.

Canada’s ADP Employment Change report showed that private businesses slashed 205,400 jobs in August. This is the best report since the beginning of the crisis but it is clear that Canada’s job market is far from recovery.

As of 7 Wednesday, Canada had 139,747 confirmed or presumptive corona virus cases. Provinces and territories listed 122,449 of those as recovered or resolved. Ontario reported another 315 new cases of COVID-19 on Wednesday — more than half of which are in people under 40. Quebec reported 303 new cases, marking the first time since May 30 the province has had more than 300 in a day. Alberta reported 171 new cases.

The US oil, WTI, is back on the bids, underpinned by the OPEC and its allies’ (OPEC+) commitment towards the output cuts policy. The alliance said on Thursday following their meeting that they will take action on members that are not complying with deep output cuts to support the market.

The fresh uptick in oil offers support to the resource-linked Loonie, capping the recovery attempts in the major. Attention now turns towards the US UoM Consumer Sentiment data and sentiment on Wall Street for fresh trading impetus.

USD/CAD 4 Hour Chart:

Support: 1.3127 (S1), 1.3090 (S2), 1.3030 (S3).

Resistance: 1.3224 (R1), 1.3284 (R2), 1.3321 (R3).

Amidst the fact that oil rallies provided support to loonie but dollar steadiness did not allow to it to be stronger in long term. We expect a bullish trend for USD/CAD.