USD/CAD defends downside near 1.3500 as US Dollar revives despite weak Durable Goods data

The USD/CAD pair recovered strongly after discovering buying interest near 1.3520 in the early New York session. The Loonie asset strengthens as the US Dollar rebounds swiftly despite downbeat United States Durable Goods Orders data for July.

US Census Bureau reported that Durable Goods Orders data for July contracted at a faster pace of 5.2% while investors anticipated contraction at a 4% pace, swinging from an expansion of 4.4% recorded for June. On Wednesday, S&P Global reported weaker preliminary PMIs for August. This indicates that firms are underutilizing their total capacity due to a bleak demand outlook.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said: “A near-stalling of business activity in August raises doubts over the strength of US economic growth in the third quarter. The survey shows that the service sector-led acceleration of growth in the second quarter has faded, accompanied by a further fall in factory output.”

Meanwhile, the major trigger for the US Dollar will be the Jackson Hole Symposium at which Federal Reserve (Fed) Chair Jerome Powell will guide about interest rates, inflation, and the outlook on the economy.

S&P500 opens on a positive note as investors hope that Jerome Powell will not consider further interest rate hikes as the labor market is losing resilience. The US Dollar Index resumes its upside journey and reaches near 104.00.

The Canadian Dollar comes under pressure due to declining oil prices. Weak preliminary PMIs reported by Western nations dampened the oil demand outlook. It is worth noting that Canada is the leading exporter of oil to the United States and lower oil prices impact the Canadian Dollar.