- USD/CAD peaked at a daily high of 1.3377 and then consolidated at 1.3355, still holding daily gains.
- Further Oil production cuts by Saudi prospects lifted prices, favouring the CAD.
- Services sectors weakened in July, according to ISM.
On Thursday’s session, the USD/CAD reversed as the USD lost traction following weak mid-tier economic data. The pair rose to nearly 1.3380 and then settled at 1.3355, while the CAD also benefited from rising Oil prices.
In July, the US Services sector displayed some weakness on the data front but stayed resilient. The S&P index came in at 52.3, lower than the consensus and previous figures of 52.4, while the Institute for Supply Management (ISM) came in at 52.7, failing to live up to the expected 53 and the last 53.9.
Labour market data indicated a slight increase in Jobless Claims to 227,000 at the end of July, as anticipated. However, Unit Labor Costs from Q2 rose by 1.6%, falling short of the expected 2.6% and the previous 3.3%. On Friday, Nonfarm Payrolls (NFPs) will offer investors a clearer outlook on the sector, along with wage inflation and unemployment figures. Overall, data on Thursday showed that the US Services sector remains resilient, but the labour market signals are mixed so NFP data will be closely watched.
On the CAD side, no relevant data will be released by Canada for the rest of the week. Rising Oil prices are giving traction to the Canadian currency, as the West Texas Intermediate (WTI) barrel rose more than 2% to $81.68 on the back of expectations of production cuts by Saudi Arabia in September.
USD/CAD Levels to watch
The technical analysis for USD/CAD on the daily chart suggests a neutral to bearish outlook as the bulls show signs of exhaustion. While the Relative Strength Index (RSI) maintains a negative slope above its midline, the Moving Average Convergence Divergence (MACD) printed neutral green bars. On the other hand, the pair is above the 20-day Simple Moving Average (SMA) but below the 100 and 200-day SMAs, suggesting that despite the recent bearish sentiment, the bulls are still resilient, holding some momentum.
Resistance levels: 1.3385 (July’s high), 1.3405 (100-day SMA), 1.3454 (200-day SMA).
Support levels: 1.3280, 1.3250, 1.3240.
USD/CAD Daily chart
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