USD/CAD inches higher towards 1.25 as oil rally falters
The USD/CAD pair gained some traction during the European session and started to recover yesterday's losses towards the 1.25 handle. As of writing, the pair is trading at 1.2491, up 0.37% on the day.
Today's macro data from the United States came in mixed but the greenback, measured by the US Dollar Index, continues to preserve its daily gains. Following yesterday's sharp drop in the NA session, the index came under a renewed pressure during the Asian session and touched its lowest level in 13 months at 93. After finding support there, the index turned positive and is now at 93.56, up 0.3% on the day.
According to the weekly report released by the US Department of Labor, weekly initial claims increased to 244K in the week ending July 22 from 234K. Other data from the U.S. showed that the international trade deficit contracted to $63.9 billion in June from $66.3 billion in May and beat the market expectations of $65 billion.
On the other hand, crude oil's rally, which has been helping the commodity-sensitive loonie gather strength against its rivals since the beginning of the week, seems to have cooled down a bit on Thursday. After moving above the $49 mark for the first time in nearly two months in the last hour, the barrel of West Texas Intermediate lost its momentum and is now trading at $48.70, virtually unchanged on the day.
There are no more data left in the day. On Friday, economic docket will feature GDP growth numbers from both Canada and the United States.
Technical outlook
With today's recovery, the RSI on the daily graph started to correct its oversold readings but is still below the 30 mark, suggesting that the recovery could continue. A daily close above the 1.2500 (psychological level) mark could open the door to 1.2555 (10-DMA) and 1.2690 (Jul. 18 high). On the downside, supports align at 1.2415 (daily low), 1.2365 (Jun. 2, 2015, low) and 1.2300 (psychological level).
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.
