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USD / CAD moves away from weekly lows, still depressed below 1.3100 after US / Canadian data

  • A combination of factors triggered new selling around USD / CAD on Wednesday.
  • The loonie remained well supported by positive oil prices, according to the upbeat Canadian CPI report.
  • A modest rebound in US bond yields benefited the dollar and helped limit losses.

The pair USD / CAD it rose during the early North American session, although it remained in negative territory, below 1.3100 after US / Canada macro data.

The pair witnessed some new selling on Wednesday and fell to week-long lows around the 1.3055 region during the first half of the trading action. Concerns about the economic fallout from the imposition of new COVID-19 restrictions in various US states kept the US dollar bulls on the defensive and put some downward pressure on the USD / CAD pair. Apart from this, a good recovery in crude oil prices sustained the commodity-linked currency – the Canadian dollar, and further contributed to the intraday decline in the USD / CAD pair.

The Canadian dollar was supported by the latest domestic consumer inflation figures, which showed the headline CPI rose 0.4% month-on-month in October and the annual rate unexpectedly rose to 0.7%. However, a modest rebound in US Treasury yields extended some support to the dollar and helped the USD / CAD rally around 30 pips from daily lows. That said, the rebound attempt lacked strong bullish conviction following the release of mixed data from the US housing market.

The USD / CAD pair was last seen trading well below 1.3100, down around 0.10% on the day. With Wednesday’s US / Canadian macroeconomic data out of the way, events related to the coronavirus saga will continue to influence USD price dynamics and produce some short-term trading opportunities. However, the pair still appears vulnerable to fall further and retest the key psychological level of 1.3000, as the focus now shifts to the weekly EIA report on US crude oil inventories for the week. which ended on November 13.

 

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