- 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|
|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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