- Loonie gains versus US dollar amid NAFTA talks, higher crude oil prices and Canadian data.
- Higher US yields supports DXY but still greenback heads to the lowest close since August 30 against CAD.
The USD/CAD pair dropped further during the US session and bottomed at 1.2973, the lowest since August 31 but still remains unable to make a clear break of the 1.2975/80 area. As of writing, it was trading around 1.2980/85, holding a bearish tone and testing a very strong support.
The Loonie was among the top performers and remains near daily highs versus the US dollar despite some strength of the greenback. While the US Dollar gained momentum across the board on the back of higher US yield, CAD received support from Canadian data and higher crude oil prices. Oil futures were higher on Tuesday, the WTI barrel eased from highs but was still up more than 1%.
Today’s data showed that nominal manufacturing sales in Canada rose 0.9% in July. “Concerns about potential trade disruptions with the US remain but, for now, the Canadian manufacturing sector seems to be doing a little better”, wrote analyst from RBC. They added that absence a more fundamental shock to the economy, the broader underlying economic backdrop still looks firm and strong enough to warrant further gradual Bank of Canada interest rate hikes.
Trade negotiations between the US and Canada continue an there is some uncertainty about the outcome. The new tariffs announcement from the US and China had no impact on the USD/CAD. The pair rose overnight but then pulled back, earasing all gains.
USD/CAD Levels to watch
The pair is testing the key support at 1.2975, a break lower would open the doors for a slide to 1.2950/60, under that level the next support might lie at 1.2935. On the upside, resistance levels could be seen at 1.3010, 1.3035 and 1.3065 (Sep 18 high).
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
AUD/USD holds hot Australian CPI-led gains above 0.6500
AUD/USD consolidates hot Australian CPI data-led strong gains above 0.6500 in early Europe on Wednesday. The Australian CPI rose 1% in QoQ in Q1 against the 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY sticks to 34-year high near 154.90 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.