USD/CAD marks fresh daily lows below 1.3400 after US and Canadian data

• Canada: Inflation continues to slow in December.
• US: Empire manufacturing index plunges unexpectedly in December.
• USD/CAD remains sideways, unable to hold above 1.3400.

The USD/CAD it broke below 1.3400 after the release of US and Canadian manufacturing data. It posted a new daily low at 1.3383. It remains near the lows, with a bearish bias, as the Loonie outperforms and the US dollar falls overall.

Data weighs on USD/CAD

The US Empire Manufacturing Index unexpectedly fell to the lowest level since May 2020. The index fell from -11.2 to -32.9, against expectations for a recovery to -4.5. Reports indicator prices showed a slowdown. The USD fell after the report.

In Canada, inflation figures came in below expectations. The Consumer Price Index fell 0.6% in December and the annual rate slowed from 6.8% to 6.3%. The Bank of Canada’s Prince Core Index fell 0.3% and the annual rate dipped to 5.4% from 5.8%, versus 6.1% market consensus.

“Broadly speaking, this probably won’t make much of a difference for the Bank of Canada. Yesterday’s business outlook survey suggested the tightening is starting to take effect, but today’s data, along with Q4 activity data Stronger-than-expected bolsters the notion that the economy is in excess demand The BOC is prudent in raising rates 25 basis points next week After last year, the BOC cannot afford the risk of fall behind the curve again. We continue looking for 4.50% as the terminal rate,” said analysts at TD Valores Bursátiles.

Sideways, within a downtrend

Last week, USD/CAD’s rebound from monthly lows was limited by the 1.3450 zone. During the current week, the pair is showing difficulties to stay above 1.3400. Recent price developments confirm that downside risks prevail.

On the flip side, initial support emerges at 1.3345 and then attention turns to the January low at 1.3320.

technical levels