- USD/CAD attracts new buying near 1.3400 and jumps to a three-week high.
- A good recovery in US bond yields and a softer risk tone help revive demand for dollars.
- The mixed report on Canadian GDP weighs on the Loonie and provides an additional boost to the pair.
The pair USD/CAD reverses an intraday slide towards 1.3400 and rises to near 3-week highs during early North American session. Buying interest picks up after the release of Canadian monthly GDP and lifts the pair to the 1.3545-1.3550 zone in the last hour.
Statistics Canada reported that the national economy expanded a nominal 0.1% in September and 0.7% during the third quarter, beating estimates of a 0.4% reading. However, this was largely offset by a lower-than-expected 2.9% annualized growth rate in the July-September period. The mixed data, coupled with a modest pullback in crude oil prices, weigh on the commodity-linked Loonie and act as a tailwind for the USD/CAD pair.
On the other hand, the US dollar pared a portion of its intraday losses, which is seen as another factor supporting the USD/CAD pair. Initial optimism, fueled by hopes that the Chinese government will ease its stringent COVID restrictions, fades rather quickly amid concerns of a deeper global economic downturn. Apart from this, a nice intraday bounce in US Treasury yields helps revive demand for the dollar as a safe haven.
Overnight comments from influential FOMC members appear to be acting as a tailwind for US bond yields and the dollar. Indeed, St Louise Fed President James Bullard, New York Fed President John Williams, and Fed Vice Chair Lael Brainard all stated that further rate hikes were warranted and that there was a long way to go to fight inflation. Furthermore, the technical buy above the key psychological 1.3500 level provides additional momentum to the USD/CAD pair.
The US Consumer Confidence Index from the Conference Board will be released next. This, along with US bond yields and broader risk sentiment, will boost demand for the USD. Also, traders will follow the oil price dynamics to take advantage of short-term opportunities around the USD/CAD pair.
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.
