- USD/CAD struggles to gain any meaningful traction amid the prevalent USD selling bias.
- Bullish crude oil prices underpin the loonie and contribute to capping gains for the pair.
- Traders now seem reluctant ahead of the monthly jobs report from the US and Canada.
The USD/CAD pair struggles to capitalize on the previous day's modest bounce from sub-1.3400 levels and oscillates in a narrow trading band through the Asian session on Friday. The upside remains capped amid the underlying bearish sentiment surrounding the US Dollar, which struggles near its lowest level since August amid dovish signals from the US central bank. In fact, Fed Chair Jerome Powell sent a clear message on Wednesday that the US central bank will soften its stance and said that it was time to slow the pace of interest rate hikes. Apart from this, signs of easing inflationary pressure and sluggish US Treasury bond yields continue to weigh on the greenback.
The US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index decelerated to 6% YoY in October from 6.3% previous. Adding to this, the annual Core PCE Price Index, the Fed's preferred gauge of inflation, edged down to 5% from 5.2% as expected. The softer data dragged the yield on the benchmark 10-year US government to a nearly two-month low. Apart from this, the recent strong recovery in crude oil prices from the YTD low underpins the commodity-linked Loonie and contributes to keeping a lid on the USD/CAD pair, at least for now.
Traders also seem reluctant to place aggressive bets ahead of the closely-watched US monthly employment details. The popularly known NFP will play a key role in influencing the near-term USD price dynamics ahead of the crucial FOMC meeting on December 13-14. Apart from this, traders will further take cues from Canadian jobs data and oil price dynamics to grab short-term opportunities around the USD/CAD pair. Nevertheless, the fundamental backdrop seems tilted in favour of the USD bears and suggests that the path of least resistance for the major is to the downside.
Technical Outlook
From a technical perspective, the overnight swing high, around the 1.3470 area, might act as immediate resistance ahead of the 1.3500 psychological mark. A sustained strength beyond could lift the USD/CAD pair towards the 1.3575-1.3580 hurdle en route to the 1.3600 round figure. The momentum could further get extended to a multi-week high, around the 1.3645 zone touched on Tuesday.
On the flip side, weakness below the 1.3400 mark is likely to find support near an ascending trend-line extending from November low, currently around the 1.3380 region. A convincing break below will expose the crucial 100-day SMA, near the 1.3300-1.3290 area. Some follow-through selling will be seen as a fresh trigger for bearish traders and set the stage for an extension of the recent decline from a 29-month peak touched in October.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD consolidates weekly gains above 1.1150
EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains
GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains.
Gold extends rally to new record-high above $2,610
Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap
SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.