USD/CAD off lows, still in the red below mid-1.2300s

  • A combination of factors prompted fresh selling around USD/CAD on the last day of the week.
  • A generally positive risk tone weighed on the safe-haven USD and exerted downward support.
  • An uptick in crude oil, stronger Canadian data underpinned the loonie and added to the selling.

The USD/CAD pair refreshed daily lows in reaction to better-than-expected Canadian macro data, albeit quickly recovered a few pips thereafter. The pair was last seen trading around the 1.2335 region, still down nearly 0.25% for the day.

The pair met with fresh supply on Friday and eroded a major part of the previous day's recovery gains from sub-1.2300 levels or four-month lows. The downfall was sponsored by renewed US dollar selling bias and a pickup in crude oil prices, which tend to underpin the commodity-linked loonie.

Easing worries about a credit crunch in China's real estate sector boosted investors confidence on the last day of the week. This was evident from a generally positive tone around the equity markets, which, in turn, was seen as a key factor that dented the greenback's relative safe-haven status.

On the other hand, the Canadian dollar benefitted from a fresh leg up in crude oil prices and slightly better-than-expected domestic data. Statistics Canada reported that Retail Sales rose 2.1% MoM in August as against the 0.6% decline reported in the previous month and 2% growth anticipated.

That said, elevated US Treasury bond yields – amid hawkish Fed expectations – should help limit any deeper USD losses and act as a tailwind for the USD/CAD pair. Investors seem convinced that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation.

Hence, the market focus would be on Fed Chair Jerome Powell's remarks during a virtual panel discussion later this Friday. This, along with the release of flash US Manufacturing/Services PMI and the US bond yields, will influence the USD and provide some impetus to the USD/CAD pair.

Technical levels to watch


Today last price 1.2334
Today Daily Change -0.0036
Today Daily Change % -0.29
Today daily open 1.237
Daily SMA20 1.2519
Daily SMA50 1.2604
Daily SMA100 1.2512
Daily SMA200 1.25
Previous Daily High 1.2384
Previous Daily Low 1.2288
Previous Weekly High 1.2498
Previous Weekly Low 1.2337
Previous Monthly High 1.2896
Previous Monthly Low 1.2494
Daily Fibonacci 38.2% 1.2347
Daily Fibonacci 61.8% 1.2325
Daily Pivot Point S1 1.2311
Daily Pivot Point S2 1.2252
Daily Pivot Point S3 1.2215
Daily Pivot Point R1 1.2406
Daily Pivot Point R2 1.2443
Daily Pivot Point R3 1.2501



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