- The dollar bounces up from multi-month lows at 1.2310.
- The pause on US bond yield's rally has weighed on the greenback.
- USD/CAD might reach 1.22 by year-end – Scotiabank.
The US dollar is trimming losses against its Canadian counterpart after having bottomed at 3, ½-month lows at 1.2310 earlier on Wednesday. The pair has returned to 1.2350, yet still about 0.25% down on the day.
The USD dips again as US yields’ rally stalls
The greenback has given away the mild recovery posted on Monday, weighed by a pause on US T-Bond yields’ rally and a higher appetite for risk. US yields have stalled near multi-year highs on Tuesday, after having surged over the last two weeks, with the investors positioning for an imminent announcement of QE tapering by the Federal Reserve.
Additionally, the better than expected earnings reports by Johnson & Johnson and Travellers have improved the market mood. These figures follow a string of bright results in the financial sector last week, to boost appetite for risk, weighing on demand for the safe-haven USD.
On a broader picture, the commodity-sensitive Canadian dollar remains buoyed by the solid rally on crude prices. The US benchmark WTI oil is trading at multi-year highs, beyond $83, which has pushed the CAD nearly 4% higher against the greenback over the last four weeks.
Macroeconomic data has not been of any help to the USD either, US building activity contracted unexpectedly in September, revealing that shortages in raw materials and labor are starting to squeeze the sector, and triggering concerns about its potential impact on the economic growth. Housing starts declined 1.6% in September, and August’s reading has been revised down to a 1.2% growth from the 3.9% previously estimated.
USD/CAD: Seen at 1.2200 ahead of the year-end – Scotiabank
From a technical perspective, the FX Analysis Team at Scotiabank observe further downside potential in the pair: “If the USD manages to steady around 1.2365/70 into this week, a modest correction could develop. We expect USD gains to remain limited to the low/mid 1.24s, however, with daily and weekly trend momentum signals aligned bearishly for the USD (…) We think USD/CAD can print a 1.22 handle ahead of year-end.”
Technical levels to watch
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 alternates gains with losses near 1.0720 post-US PCE
The bullish tone in the Greenback motivates EUR/USD to maintain its daily range in the low 1.070s in the wake of firmer-than-estimated US inflation data measured by the PCE.
GBP/USD clings to gains just above 1.2500 on US PCE
GBP/USD keeps its uptrend unchanged and navigates the area beyond 1.2500 the figure amidst slight gains in the US Dollar following the release of US inflation tracked by the PCE.
Gold keeps its daily gains near $2,350 following US inflation
Gold prices maintain their constructive bias around $2,350 after US inflation data gauged by the PCE surpassed consensus in March and US yields trade with slight losses following recent peaks.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.