- USD/CAD bears take a breather around weekly low after a three-day downtrend.
- Oil needs an extra boost to refresh two-month top, marked amid risk-on mood.
- Firmer-than-expected Canadian data contrasts softer US PMIs to favor pair sellers.
- Risk catalysts, US housing data may offer fresh impulse.
USD/CAD holds lower ground near the two-week low surrounding 1.2650 during the early Friday morning in Asia. In doing so, the Loonie pair pauses after declining for three days at a stretch, not to forget after posting the heaviest daily fall since late August.
Alike other major currencies, USD/CAD also cheered the market’s risk-on mood, actually got a double boost due to the oil prices rally to refresh two-month high. The upbeat sentiment dragged the US Dollar Index (DXY) the most since August 27, adding more losses than the post-Fed upside to refresh the monthly top.
While tracing the roots, fading fears that China’s struggled real-estate firm Evergrande is a serious threat to the economy play a key role. The firm got restructuring plans and showed readiness to pay a scheduled coupon while also gained government support to lift the sentiment.
In addition to weighing on the DXY, the brighter mood also favored the US equities while the US 10-year Treasury yields jumped the most in 10 weeks, finally justifying the Fed’s hints of tapering and rate hikes.
Elsewhere, the preliminary readings of the US Markit PMIs for September softened than expected but Canadian Retail Sales for July improved versus -1.2% forecast to -0.6% MoM, versus +4.2% prior readouts.
Although a lighter calendar and a lack of major events may challenge the USD/CAD upside, the pair bears may keep the reins amid risk-on mood and firmer prices of Canada’s biggest export, WTI crude oil. To filter the moves, US New Home Sales for August, expected 0.7M versus 0.708M prior, may offer extra clues while risk catalysts like a global push towards vaccinations and headlines from China keep the driver’s seat.
Technical analysis
A clear downside break of a three-week-old support line, now resistance around 1.2700, directs USD/CAD bears towards 50-DMA, close to 1.2620.
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
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.