Economists at Scotiabank see limited scope for the loonie to rebound in the short run and ongoing upside risk for USD/CAD towards 1.3350.

“A strong weekly close for the USD plus bullishly-aligned trend strength oscillators – DMI – on the intraday, daily and weekly charts suggest ongoing upside risks for the USD in the week ahead and limited potential for counter-trend USD corrections.”

“We look for USD dips to remain well supported on weakness to the low/mid-1.32s now.”

“We spot resistance – and the likely bogey for a bullish-USD response to developments next week – at 1.3350. Above there, we spot resistance at 1.3420 and 1.3650.”

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Following a brief consolidation period, EUR/USD came under bearish pressure and dropped below 0.9750 during the American session on Friday. Better than expected Manufacturing and Services PMI figures from the US provided a boost to the dollar, further weighing on the pair.

After having recovered toward 1.1100 earlier in the day, GBP/USD turned south in the American session and touched its lowest level since 1985 below 1.0900. The PMI data from the US showed that the private sector activity recovered in September, fueling another leg higher in DXY.

Pressured by the renewed dollar strength on upbeat US PMI figures, gold lost its recovery momentum and dropped below $1,650. Meanwhile, the 10-year US T-bond yield is up nearly 1%, forcing XAU/USD to stay on the backfoot heading into the weekend.

Bitcoin price has produced three consecutive lower lows since September 7, but at the same time, the Relative Strength Indicator (RSI) has shown a positive rise demonstrating a lack of underlying bearish power.

Tesla (TSLA) reacted poorly to the latest central bank developments with the stock falling 4% on Thursday. Main indices were not as badly hit with the S&P 500 losing less than 1% and the Nasdaq just over 1%.

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