- USD/CAD bounces off weekly lows to 1.2870.
- Canadian data beats expectations, while US data disappoints.
- The focus is on next week’s FOMC meeting.
The USD/CAD is about to end the week hovering around 1.2870 after bouncing from 1.2820. However, the US dollar is about to end the week on a negative note ahead of the FOMC meeting.
Economic data
The USD fell after the release of the S&P Global PMI report which showed an unexpected contraction in the services sector in July according to preliminary data. The figures further boosted Treasuries and weighed on the US dollar. Attention now turns to next week’s FOMC meeting.
In Canada, data showed that retail sales rose above the market consensus in May, rising 2.2%, with the preliminary estimate for June pointing to a 0.3% rise. Though the numbers didn’t help the loonie who pulled back as Wall Street stocks fell further.
Key support holds
USD/CAD rebounded after approaching the critical support zone at 1.2820 and even recovered levels above the other relevant support at 1.2850, leaving the pair back in the previous range.
In weekly terms, USD/CAD is about to end the week with losses after failing to break the resistance at 1.3020. The wide range between 1.2850 and 1.3020 still prevails.
“CAD has rallied over the past week causing USD/CAD to fall back below 1.2900 supported by the rebound in global equity markets. USD/CAD has had one of the strongest correlations with the performance of global stock markets among the G10 currency pairs.At the current juncture, we view this stock market rebound as likely a bear market rebound.Consequently, the USD/CAD downward correction it should be limited and of short duration”, consider the analysts at MUFG Bank.
Technical levels
Source: Fx Street
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