USD/CAD retreats towards 1.3600 despite downbeat oil prices, US/Canada PMIs eyed
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- USD/CAD snaps three-day uptrend, steps back from one-week high.
- Risk-aversion, softer oil prices helped buyers to keep the reins before the latest consolidation move.
- October’s PMIs for Canada, US will offer immediate directions ahead of Wednesday’s FOMC, Friday’s job numbers.
USD/CAD begins Tuesday’s trading on the negative side as it drops to 1.3610 following an upbeat start to the key week. The Loonie pair’s latest pullback fails to take clues from the downbeat prices of Canada’s essential export item, WTI crude oil, and the market’s rush towards the US dollar in search of risk safety. The reason could be the anxiety ahead of important central bank announcements and the monthly employment data.
WTI crude oil remains pressured for the third consecutive day, down 0.22% intraday, around $86.10 at the latest. The black gold’s recent weakness could be linked to the downbeat activity data from China, the fresh covid-led lockdown and the fears emanating from it. Also, US President Joe Biden’s push for lower energy prices could exert downside pressure on black gold prices. “US President Joe Biden on Monday called on oil and gas companies to use their record profits to lower costs for Americans and increase production, or pay a higher tax rate, as he battles high pump prices with elections coming in a week,” said Reuters.
Elsewhere, downbeat prints of the US activity data might have favored the USD/CAD sellers to take the risk. The US Chicago Purchasing Managers’ Index and Dallas Fed Manufacturing Business Index for October came in at 45.2 and -19.4 versus 47.0 and -15.0 expected, respectively.
Even so, the market’s fears of hawkish Fed and cautious mood ahead of the key central bank announcements and employment data underpinned the US dollar’s demand. Also portraying the sour sentiment were firmer US Treasury yields and equities.
Looking forward, Canada’s S&P Global Manufacturing PMI for October, expected 49.2 versus 49.8 prior, will join the US ISM Manufacturing PMI, likely to ease to 50.0 versus 50.9 prior, and will direct immediate USD/CAD moves. Additionally, The US S&P Global Manufacturing PMI for the stated month, expected to confirm the initial forecast of 49.9 figure, will join the JOLTS Jobs Openings for September, forecast 10M versus 10.053M prior, to also entertain the pair traders.
It should, however, be noted that Wednesday’s all-important Federal Open Market Committee (FOMC) meeting and Friday’s jobs report from the US and Canada are crucial catalysts for the Loonie pair traders to watch for precise directions.
Technical analysis
A pullback from the 21-DMA hurdle, around 1.3695 by the press time, directs the USD/CAD bears towards a four-day-old support line near 1.3590.
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