USD / CAD Holds Near Weekly Lows, Little Moves Following US / Canadian Macro Data

• USD / CAD was down for the third day in a row on Thursday and fell to a new weekly low.
• As US bond yields bounced, the Fed’s aggressive outlook held the USD up and provided support.
• An intraday rebound in oil prices benefited the loonie and continued to limit the pair’s rise.
• The pair had a rather subdued reaction to top-tier US macroeconomic data and Canada’s monthly GDP figure..

The pair USD / CAD remained on the defensive near the 1.2825-30 region, just a few pips above the weekly low touched earlier this Thursday and moved little after US / Canadian macro data.

The pair extended its retracement slide from the 1.2965 area, or the yearly high touched earlier this week, and was down for the third day in a row, although the slide lacked bearish conviction. Against the backdrop of the Fed’s aggressive outlook, a modest rally in US Treasury yields helped reignite demand for the US dollar and acted as a tailwind for the USD / CAD pair.

That said, the prevailing risk appetite environment kept any significant gains for the safe haven dollar in check. Apart from this, an intraday rally in crude oil prices sustained the Canadian dollar pegged to commodities and put some pressure on the USD / CAD pair. Traders reacted little to the mostly upbeat US economic releases, largely ignoring the monthly Canadian GDP report.

The US Census Bureau reported that US durable goods orders increased 2.5% month-on-month in November, beating consensus estimates for a 1.6% increase. Added to this, the prior month’s reading was also revised up to show a modest 0.1% growth compared to the previously reported 0.5% drop. Additionally, underlying durable goods orders increased 0.8% month-on-month versus a forecast 0.6% increase.

Separately, data released by the US Department of Labor (DOL) showed that initial weekly jobless claims held steady at 205,000 for the week ending December 18, in line with expectations. Meanwhile, US Personal Income increased 0.4% month-on-month and US Personal Spending posted 0.6% growth in November, both marking a slight moderation from previous months’ readings.

From Canada, the monthly GDP figure was in line with market expectations and showed strong month-on-month growth of 0.8% in November. However, the data did little to provide a significant boost to the USD / CAD pair as investors now look reluctant amid tight liquidity looming for the end of the year holidays. This, in turn, requires some caution before placing aggressive directional bets.

Technical levels