USD/CAD advances above 1.3050 as dollar gathers strength on Fed's Evans' comments

Hawkish comments from Fed's Evans lift the DXY to mid-95s.
WTI looks to settle below $67 for the day.

Eren Sengezer FXStreet

The USD/CAD pair gained traction in the last hour and touched a fresh daily high at 1.3064 after Chicago Fed President Charles Evans' hawkish comments boosted the greenback. As of writing, the pair was trading at 1.3055, adding 0.25% on the day.

In an interview on Thursday, Evans, who is a known dove, said that the "extremely strong" performance of the economy assured him that the inflation would stay near or slightly above the Fed's target of 2%. Regarding rate hikes, Evans stated one or two more rate hikes by the end of the year would be reasonable. This shift in Evans' monetary policy outlook helped the buck gather strength against its rivals, and the US Dollar Index touched a fresh three day high at 95.50. At the moment, the index is up 0.38% on the day at 95.45.

On the other hand, following a modest recovery during the first half of the day, crude oil prices came under pressure during the American trading hours, and the barrel of West Texas Intermediate turned flat near $66.70 to make it difficult for the commodity-linked loonie to find demand.

Earlier today, the data from Canada showed that housing starts on a yearly basis fell to 206.3K in July and missed the experts'expectation of 219.5K. On the other hand, the new housing price index rose 0.1% in June after staying unchanged in May and met the market consensus.

Technical outlook

The pair could face the first technical resistance at 1.3070 (20-DMA) ahead of 1.3115 (Aug. 8 low) and 1.3145 (50-DMA). On the downside, supports are located at 1.3000 (100-DMA/psychological level), 1.2960 (Aug. 7 low) and 1.2920 (Jun. 8 low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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