• A combination of factors assisted USD/CAD to gain some positive traction on Friday.
  • A softer risk tone, elevated US bond yields revived demand for the safe-haven USD.
  • Weaker Canadian GDP print, a fresh leg down in oil prices undermined the loonie.
  • The markets had a rather muted reaction to the mixed US PCE Price Index data.

The USD/CAD pair shot to fresh daily tops during the early North American session, with bulls making a fresh attempt to conquer the 1.2400 round-figure mark.

A strong follow-through uptick in the US Treasury bond yields allowed the US dollar to stage a solid rebound from one-month lows touched in reaction to dismal US GDP print on Thursday. This, in turn, was seen as a key factor that assisted the USD/CAD pair to attract some buying on the last day of the week and rally nearly 70 pips from the daily swing lows, around the 1.2330-25 region.

The intraday positive move picked up pace in the last hour following the release of the Canadian monthly GDP report, which showed that the economy expanded by 0.4% in August. This marked a notable recovery from a modest decline recorded in August but was well short of market expectations for a 0.7% growth and turned out to be a key factor that weighed on the Canadian dollar.

From the US, the Fed's preferred inflation gauge – the Core PCE Price Index – held steady near 30-year highs in September and came in at 3.6% YoY, slightly below 3.7% anticipated. Additional details showed that Personal Income declined significantly, by 1.0% MoM, while Personal Spending rose +0.6% MoM. Nevertheless, the data indicated that consumer cost pressures are getting entrenched.

This, in turn, validated market expectations that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation. This was evident from elevated US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond climbed back to 1.61%, which, along with a softer risk tone, continued benefitting the safe-haven greenback.

Apart from this, a fresh leg down in crude oil prices undermined the commodity-linked loonie, which was seen as another factor that provided a goodish lift to the USD/CAD pair. It will now be interesting to see if the pair is able to capitalize on the move and confirm a near-term bullish breakout through a downward sloping channel extending from September swing highs.

Technical levels to watch

USD/CAD

Overview
Today last price 1.2383
Today Daily Change 0.0037
Today Daily Change % 0.30
Today daily open 1.2346
 
Trends
Daily SMA20 1.2441
Daily SMA50 1.2577
Daily SMA100 1.2525
Daily SMA200 1.2492
 
Levels
Previous Daily High 1.2382
Previous Daily Low 1.233
Previous Weekly High 1.241
Previous Weekly Low 1.2288
Previous Monthly High 1.2896
Previous Monthly Low 1.2494
Daily Fibonacci 38.2% 1.235
Daily Fibonacci 61.8% 1.2363
Daily Pivot Point S1 1.2323
Daily Pivot Point S2 1.23
Daily Pivot Point S3 1.2271
Daily Pivot Point R1 1.2375
Daily Pivot Point R2 1.2405
Daily Pivot Point R3 1.2428

 

 

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