USD/CAD off weekly lows, still depressed below 1.3100 mark post-US/Canadian data
|- A combination of factors prompted some fresh selling around USD/CAD on Wednesday.
- The loonie remained well supported by positive oil prices, upbeat Canadian CPI report.
- A modest bounce in the US bond yields benefitted the USD and helped limit the losses.
The USD/CAD pair edged higher during the early North American session, albeit remained in the negative territory, below the 1.3100 mark post-US/Canadian macro data.
The pair witnessed some fresh selling on Wednesday and dropped to near one-week lows, around the 1.3055 region during the first half of the trading action. Concerns about the economic fallout from the imposition of new COVID-19 restrictions in several US states kept the US dollar bulls on the defensive and exerted some downward pressure on the USD/CAD pair. Apart from this, a goodish pickup in crude oil prices underpinned the commodity-linked currency – the loonie – and further contributed to the USD/CAD pair's intraday slide.
The Canadian dollar was further supported by the latest domestic consumer inflation figures, which showed that the headline CPI rose 0.4% MoM in October and the yearly rate unexpectedly jumped to 0.7%. However, a modest bounce in the US Treasury bond yields extended some support to the greenback and assisted the USD/CAD pair to rebound around 30 pips from daily swing lows. That said, the attempted bounce lacked any strong bullish conviction following the release of mixed US housing market data – Building Permits and Housing Starts.
The USD/CAD pair was last seen trading well below the 1.3100 mark, down around 0.10% for the day. With Wednesday's US/Canadian macro data out of the way, developments surrounding the coronavirus saga will continue to influence the USD price dynamics and produce some short-term trading opportunities. Nevertheless, the pair still seems vulnerable to slide further and retest the key 1.3000 psychological mark as the focus now shifts to the weekly EIA report on US crude oil inventories for the week ended November 13.
Technical levels to watch
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