- USD/CAD oscillates within a tight range and is influenced by a combination of divergent factors.
- A weaker USD acts as a headwind for the pair, while lower oil prices weigh on the CAD and provide support for the pair.
- Traders balk at Fed Chairman Jerome Powell’s speech at the Jackson Hole symposium.
The USD/CAD pair is struggling to gain significant traction on Thursday, although it manages to hold above the psychological 1.3500 level at the start of the European session. The mixed fundamental background, meanwhile, warrants caution before positioning for an extension of the previous day’s rejection dip from the 1.3600 region, or the highest level since May 31.
The US dollar (USD) continues to be weighed down by the disappointing release of preliminary US PMI data on Wednesday, which showed that business activity approached stagnation point in August. In fact, the S&P Global US Composite PMI fell to 50.4 points in August from the previous 52, recording the biggest drop since November 2022. This, coupled with a further drop in US Treasury yields. The US puts some pressure on the Dollar and the USD/CAD pair.
Meanwhile, the pullback in the DXY Dollar Index, which measures the dollar against a basket of currencies, from a more than two-month high, appears limited ahead of Federal Reserve Chairman Jerome Powell’s speech at the Symposium of Jackson Hole. Investors will closely watch Powell’s comments for further clues on the Fed’s future rate hike path, which will play a key role in short-term dollar demand and provide further directional momentum to the USD/CAD pair. .
Meanwhile, weaker-than-expected Canadian retail sales numbers released the day before, coupled with falling crude oil prices, could weigh on the commodity currency CAD and provide some support. the pair. In fact, oil prices are weakening near one-month lows on concerns that a deeper global economic downturn will dent demand for fuel. Fears were resurfaced after the release of a series of manufacturing surveys that gave a bleak picture of the health of economies around the world.
Therefore, strong monitoring of the selling is needed to confirm that the recent bull run seen since the beginning of this month has ended and the USD/CAD pair has topped out near the 1.3600 level. Market participants are now focused on the US economic calendar, which will see the usual weekly data on initial jobless claims and durable goods orders. This, along with speeches from influential FOMC members, will weigh on the USD and provide some momentum to the USD/CAD pair.
USD/CAD technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
