- USD/CAD witnessed some selling in reaction to hotter-than-expected Canadian CPI figures.
- A goodish bounce in oil prices further underpinned the loonie and added to the selling bias.
- A subdued USD demand did little to influence as the focus remains on the FOMC minutes.
The USD/CAD pair refreshed daily lows in reaction to hotter-than-expected Canadian consumer inflation figures, with bears now looking to extend the momentum further below the 1.2600 mark.
Following a brief consolidation through the early North American session, the USD/CAD pair witnessed some selling after the headline Canadian CPI smashed expectations and rose 0.6% in July. The yearly rate also surpassed consensus estimates and came in at 3.3%, making a notable increase from the 2.7% recorded in June.
Adding to this, the Bank of Canada's core CPI (excluding the most volatile items) climbed 0.6% MoM and 3.3% YoY, again beating estimates for a reading of 0.1% and 2.8%, respectively. Apart from this, a goodish rebound in crude oil prices underpinned the commodity-linked loonie and exerted some pressure on the USD/CAD pair.
On the other hand, diminishing odds for an early policy tightening by the Fed kept the US dollar bulls on the defensive. This was seen as another factor that dragged the USD/CAD pair lower, marking the first day of a negative move in the previous three. That said, a combination of factors helped limit any further losses.
Worries about the economic fallout from the fast-spreading Delta variant of the coronavirus, along with political tensions in Afghanistan weighed on investors' sentiment. Adding to this, a strong pickup in the US Treasury bond yields, acted as a tailwind for the safe-haven USD and extended some support to the USD/CAD pair.
Moreover, investors also seemed reluctant to place any aggressive bets, rather preferred to wait for fresh impetus from Wednesday's release of the FOMC meeting minutes. Nevertheless, the USD/CAD pair has now eroded a part of the overnight gains to four-week lows, though the lack of follow-through selling warrants caution for bearish traders.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD bulls retain control near 1.3300 mark, highest since March 2022
The GBP/USD pair trades with a positive bias for the third straight day on Friday and hovers around the 1.3300 mark during the Asian session, just below its highest level since March 2022 touched the previous day.
USD/JPY pops and drops on BoJ's expected hold
USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.
Gold consolidates weekly gains, with sight on $2,600 and beyond
Gold price is looking to build on the previous day’s rebound early Friday, consolidating weekly gains amid the overnight weakness in the US Dollar alongside the US Treasury bond yields. Traders now await the speeches from US Federal Reserve monetary policymakers for fresh hints on the central bank’s path forward on interest rates.
Shiba Inu is poised for a rally as price action and on-chain metrics signal bullish momentum
Shiba Inu remains strong on Friday after breaking above a symmetrical triangle pattern on Thursday. This breakout signals bullish momentum, further bolstered by a rise in daily new transactions that suggests a potential rally in the coming days.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.