USD/CAD bounces off multi-week lows near 1.3300

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  • USD/CAD rebounds and retests 1.3330.
  • In the US, headline and core inflation fell in December.
  • US Consumer Sentiment is next on the agenda.

USD/CAD is now regaining some bullish traction and revisits the 1.3330 zone on Friday, while leaving behind previous lows in the vicinity of 1.3300, an area last traded in late November 2022.

USD/CAD seems to have support at 1.3300

USD/CAD is navigating a tight range at the end of the week and is still unable to muster any lasting bullish traction after Thursday’s sharp pullback to the 1.3300 region.

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The pair, meanwhile, remained listless after US inflation figures showed headline PCE up 5.0% in the year to December (from 5.5%) and core PCE gained 4.4% in the last twelve months (from 4.7%).

Additional data release in the US Calendar saw Personal Income grow 0.2% MoM in the final month of 2022 and Personal Spending decline 0.2% vs. prior months. Later in the session, Michigan’s Pending Home Sales and Consumer Sentiment for the current month will be released.

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Another positive session in WTI prices lends additional wings to the loonie so far, keeping the pair’s upside potential contained somewhat.

Cash also remains on track to close the sixth consecutive week with losses, although the 1.3300 area seems to have emerged as hard support for now.

The CAD, meanwhile, seems well propped up by crude oil prices and the recent BoC rate hike (Jan 25). It should be remembered that the BOC adjusted to the consensus and raised the official interest rate by 25 basis points, to 4.50%, although it noted that further rate hikes are now unlikely in a context of easing inflation and some loss of boost of economic activity. However, the bank is expected to remain “reliant on data.”

Significant USD/CAD levels

As of this writing, the pair is up 0.09% at 1.3328 and faces the next upside barrier at 1.3483 (55-day SMA), followed by 1.3520 (weekly high Jan 19) and finally 1.3685 (2023 high of Jan 3). On the other hand, the break of 1.3303 (2023 low Jan 26) would target 1.3225 (monthly low Nov 15, 2022) and then 1.3205 (200-day SMA).

Source: Fx Street

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