USD/CAD trims weekly losses, approaches 1.2400
- USD/CAD pares some weekly losses amid broad US dollar strength across the board.
- Risk-on market mood, depicted by US stock indexes, hurts safe-haven currencies, except for the greenback.
- The Loonie falls, despite rising crude oil prices.
The USD/CAD is advancing during the New York session, up 0.19%, trading at 1.2393 at the time of writing. An upbeat market sentiment surrounds the market portrayed by US equity indexes rising between 0.17% and 0.92%.
Western Texas Intermediate (WTI), the US benchmark for crude oil, which significantly influences the Canadian dollar, is rising 0.61%, trades at $81.42, failing to lift the CAD.
The US Dollar trims some weekly losses, rises above the 94.00 threshold
The US Dollar Index that tracks the greenback’s performance against a basket of rivals advances 0.03%, currently at 94.01, underpinned by the US 10-year benchmark note yield, which rises almost six basis points, sitting at 1.574%
On Friday, the Bank of Canada Governor Tim Macklem warned that the faster pace of price increases may persist longer than expected and may slow the pace of Canada’s economic recovery, as global supply-chain issues weigh on the domestic economy. Further added that bottlenecks, international shipping shortages, and higher oil prices are not easing as quickly as central bankers across the globe expected.
Moving to macroeconomic data, the Canadian docket featured Wholesale Sales for August, which rose by 0.3%, lower than the 0.5% estimated by economists. Regarding the US, September’s Retail Sales unexpectedly increased by 0.7%, better than the 0.2% contraction foreseen by analysts, whereas excluding autos, expanded 0.8% more than the 0.5% expected.
Additionally, the University of Michigan Consumer Sentiment Index came at 71.4, lower than the 72.8 expected by investors, the second-lowest reading since 2011, as consumers grew more worried about current conditions and the economic outlook.
USD/CAD Technical outlook: To plunge to 1.22 sooner than expected – Scotiabank
Economists at Scotiabank expect the USD/CAD pair to plunge to 1.2200 in the following few weeks:
“We continue to forecast 1.22 for year-end but feel the USD/CAD risks hitting that point in the next few weeks before perhaps rebounding somewhat in December.”
“There is little, obvious support for the USD until the low 1.22s (76.4% Fibonacci support at 1.2229), but we can see some potential congestion in the 1.2275/1.2325 range that may slow USD losses.”
“Resistance is 1.2340/45 and 1.25.”
USD/CAD KEY ADDITIONAL LEVELS TO WATCH
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
