- USD / CAD came under new selling pressure on Thursday amid widespread USD weakness.
- The bulls seemed rather unimpressed by falling oil prices, which tend to undermine the loonie.
- Disappointing U.S. unemployment claims offset dismal retail sales Canadians and did not do much to provide support.
The pair USD / CAD it maintained its strongly offered tone near the weekly lows around the 1.2655-60 zone and was unable to get any respite from the lousy Canadian macro data.
The pair witnessed a aggressive sell on Thursday and prolonged its pullback from the 1.2900 area, or month-long highs hit on the first day of the current week. This marked the third day in a row of a negative move and was solely sponsored by widespread weakness in the US dollar.
On Wednesday, the Fed indicated that it will likely begin reducing its monthly bond purchases towards the end of this year. However, this disappointed some investors who expected an immediate start to the withdrawal of the massive stimulus from the pandemic era and led to some profit-taking around the dollar.
In fact, the key USD index erased the previous day’s FOMC-inspired hard gains to month-long highs and was further pressured by the prevailing risk climate. This, to a greater extent, helped offset a modest intraday decline in oil prices, which tends to undermine demand for the commodity-linked Canadian dollar.
The loonie maintained its strong intraday gains against its US counterpart following the disappointing release of domestic retail sales figures. Data released by Statistics Canada showed that retail sales contracted 0.6% in July, disappointing expectations for growth of 4.4% by a large margin.
Excluding automobiles, Canadian retail sales decreased 1% during the reported month compared to consensus estimates of a 4.6% increase. The data, to a greater extent, was offset by an unexpected jump in initial US weekly jobless claims to 351,000 from the prior week’s reading of 335.00.
Meanwhile, the inability of the USD / CAD pair to find buyers supports the prospects for further losses. That being said, the RSI (14) on the 1 hour chart is already showing intermittent oversold conditions, so it is wise to wait for some consolidation or a modest bounce before positioning for a further depreciation move.
Technical levels
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