- USD / CAD witnessed strong selling for the second consecutive session on Friday.
- A widespread weakness in the USD was seen as a key factor putting pressure on the pair.
- Disappointing Canadian data, a sharp pullback in oil prices did little to support.
The pair USD / CAD It continued to lose ground during the early North American session and plunged into the neighborhood of 1.2600 or month-long lows in the past hour.
The pair was unable to capitalize on its initial rally, instead witnessing some aggressive selling near the 1.2715 region and extending this week’s rejection drop from the 50-day SMA. The drop was solely sponsored by the strongly offered tone surrounding the US dollar and did not appear to be affected by the disappointing Canadian retail sales data.
Top sales fell 3.4% month-on-month in December versus consensus estimates that point to a 2.5% drop and 1.3% growth recorded in the previous month. Added to this, top sales (excluding automobiles) plunged 4.1% during the reported month from a 2.1% increase in November. The data, however, did little to support the USD / CAD pair.
The bulls even ignored a sharp decline in crude oil prices, which tend to undermine demand for the commodity-linked loonie. On the other hand, a good recovery in US Treasury yields did not provide any respite for USD bulls or halt the USD / CAD’s sharp intraday slide to the lowest level since Jan 21.
Indeed, the yield on the benchmark 10-year US government bond again approached a one-year high amid firm expectations of a massive US fiscal spending plan. The $ 1.9 trillion stimulus package proposed by President Joe Biden has been fueling hopes for a strong economic recovery and a possible acceleration in inflation.
Going forward, market participants now await the release of flash PMI impressions (PMI manufacturing and services) and US existing home sales data. This, along with US bond yields, could influence USD price dynamics and generate some short-term trading opportunities around USD / CAD.
Technical levels
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