USD/CAD recovers above 1.28 as DXY gains traction

Dismal manufacturing data from Canada weighs on the loonie.
US T-bond yields lift the DXY to fresh daily highs.
WTI eases toward $57.

Eren Sengezer FXStreet

After dropping to mid-1.27s during the European session, the USD/CAD pair reversed course and turned positive above the 1.28 handle. As of writing, the pair was trading at 1.2810, adding 0.15% on the day.

Greenback gathers strength in the NA session

The US Dollar Index, which had failed to make a meaningful recovery following the sharp drop witnessed after the FOMC released the monetary policy statement on Wednesday, gained traction in the last couple of hours and started to rise towards the 94 mark. A 1% increase seen in the 10-year US T-bond yield seems to be the primary driver of this recent upsurge as today's macroeconomic data from the United States was largely ignored by the participants.

On the other hand, the data from Canada showed that manufacturing sales contracted by 0.4% on a monthly basis in October following September's 0.5%, further weighing on the loonie. Moreover, the barrel of West Texas Intermediate is struggling to hold on to its modest recovery gains on Thursday, making it difficult for the commodity-sensitive currency to show any resilience against its rivals. As of writing, the barrel of WTI was trading at $57.20, up only 15 cents on the day.

Technical outlook

The first technical support for the pair could be seen at 1.2760 (50-DMA) ahead of 1.2700 (psychological level) and 1.2620 (Dec. 5 low). On the upside, resistances align 1.2850 (200-DMA), 1.2915 (Oct. 31 high) and 1.3000 (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.

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