- Resurgent USD demand helped USD / CAD regain positive traction on Tuesday.
- Mixed economic data from the US did little to provide a significant boost to the pair.
- Rising crude oil prices did not benefit the loonie nor hinder the intraday upward movement.
The pair USD / CAD spiked to fresh month-long highs heading into the North American session, and the bulls are now expecting a sustained move past the 1.2200 mark after macro data from the United States.
The pair drew some buying on dips near the 1.2130 region on Tuesday and built on its recent bounce from near the key psychological level of 1.2000, or multi-year lows touched earlier this month. The positive intra-day movement supported solely by a good recovery in US dollar demand and did not appear to be affected by the ongoing bullish trend in crude oil prices, which tend to prop up the commodity-linked Canadian dollar.
The dollar remained supported by expectations of a slightly less dovish Fed. Investors now appear concerned about mounting inflationary pressures and may have already begun to assess the prospects for an earlier withdrawal of stimulus. Speculation was further fueled by the better-than-expected US producer price index, which rose 0.8% month-on-month in May and 6.6% year-on-year. This, in turn, continued to act as a tailwind for the dollar.
On the other hand, monthly US retail sales disappointed market expectations and fell 1.3% MoM in May. This, however, was largely offset by an upward revision of the previous month’s reading to show solid growth of 0.9% compared to the previous estimate of a flat reading. Meanwhile, excluding automobiles, underlying retail sales and the Retail Sales Control Group, followed closely, fell 0.7% versus market expectations of + 0.2% and -0.6%, respectively.
Tuesday’s US economic docket also includes the release of data from the Empire State Manufacturing and Industrial Production Index, though this is unlikely to provide a significant boost. Traders now seemed reluctant to place aggressive bets, preferring to wait on the sidelines for a new catalyst from the FOMC’s monetary policy decision on Wednesday.
Technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
