USD/CAD keeps the red near weekly lows, around mid-1.2600s post-Canadian/US data
- USD/CAD came under renewed selling pressure on Thursday amid a broad-based USD weakness.
- Bulls seemed rather unimpressed by retreating oil prices, which tend to undermine the loonie.
- Disappointing US Jobless Claims offset dismal Canadian Retail Sales and did little to lend support.
The USD/CAD pair maintained its heavily offered tone near weekly lows, around the 1.2655-60 region and failed to gain any respite for dismal Canadian macro data.
The pair witnessed aggressive selling on Thursday and prolonged its retracement slide from the 1.2900 neighbourhood, or one-month tops touched on the first day of the current week. This marked the third successive day of a negative move and was exclusively sponsored by a broad-based US dollar weakness.
The Fed on Wednesday indicated that it will likely begin reducing its monthly bond purchases toward the end of this year. This, however, disappointed some investors expecting an immediate start to the withdrawal of the massive pandemic-era stimulus and prompted some profit-taking around the greenback.
In fact, the key USD Index erased the previous day's hawkish FOMC-inspired gains to one-month tops and was further pressured by the prevalent risk-on mood. This, to a larger extent, helped offset a modest intraday pullback in oil prices, which tends to undermine demand for the commodity-linked loonie.
The Canadian dollar held on to its strong intraday gains against its American counterpart following the disappointing release of domestic Retail Sales figures. Data published by Statistics Canada showed that Retail Sales contracted by 0.6% in July, missing expectations for 4.4% growth by a big margin.
Excluding automobiles, Retail Sales in Canada declined by 1% during the reported month as against consensus estimates for an increase of 4.6%. The data, to a larger extent, was offset by an unexpected jump in the US Weekly Initial Jobless Claims to 351K from the previous week's reading of 335K.
Meanwhile, the USD/CAD pair's inability to find buyers supports prospects for additional losses. That said, RSI (14) on the 1-hour chart is already flashing oversold conditions, making it prudent to wait for some consolidation or a modest bounce before positioning for a further depreciating move.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
