USD/CAD directionless around mid-1.23s in choppy session
|After recording its fifth straight daily gain yesterday, the USD/CAD has gone into a consolidation phase and has been trading in a narrow 40-pip channel on Thursday. As of writing, the pair was at 1.2348, adding 0.19% on the day.
The macro data from the U.S. failed to help the greenback gather further strength against its peers. Although weekly jobless claims and Philly Fed Manufacturing Index both beat the market estimates, they were largely ignored by the participants. The US Dollar Index, which jumped to a weekly high at 92.50 following the hawkish FOMC statement, is now at 92.12, losing 0.1% on the day. However, today's movement seems to be a technical correction, and the index is likely to gain traction in the near-term as long as it remains above the 92 handle.
- US: Weekly initial claims was 259,000, a decrease of 23,000 from previous week
- Philly Fed: Index for current manufacturing activity in the region increased 5 points to 23.8
On the other hand, the price action of crude oil remains fairly subdued, not providing any directional hints for the commodity-sensitive loonie. As of writing, the barrel of West Texas Intermediate is at $50.60, down only 6 cents.
On Friday, the economic docket from Canada will feature the retail sales and the CPI data. On a monthly basis, consumer inflation in Canada is expected to rise by 0.2% after staying unchanged in July. An upbeat CPI reading could help the CAD start correcting its losses against the buck. However, with heightened expectations of a Fed December rate hike, the DXY is likely to continue to be the primary driver of the pair's movements.
Technical outlook
The RSI indicator on the daily graph is moving sideways near the 50 mark, supporting the view of a short-term neutral outlook. The pair could encounter the first technical hurdle at 1.2410 (Sep. 6 high) before 1.2460 (50-DMA) and 1.2500 (psychological level). On the downside, supports could be seen at 1.2280 (20-DMA), 1.2200 (psychological level) and 1.2120 (Sep. 15 low).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.