- The USD/CAD lowers and updates the daily low during the beginning of the American session.
- Mixed macroeconomic data from Canada and the US fail to give the pair a significant boost.
- The fundamental backdrop supports the outlook for some buying in the downturn.
The pair USD/CAD witnessed some selling during the early American session and updates its daily low in reaction to macro data from the US and Canada. The pair is currently trading with modest intraday losses, just below 1.2900.
A modest rebound in crude prices appears to underpin the commodity-linked loonie and act as a USD/CAD headwind. The pair is lower and appears to be unaffected by the Canadian consumer inflation figures. Statistics Canada reported that the Canadian CPI slowed to 7.6% yoy in July from 8.1% in the previous month. More importantly, the Bank of Canada’s core CPI, which excludes volatile food and energy prices, unexpectedly fell to 6.1% yoy from 6.2% in June.
This, coupled with some buying of US dollars for the third day in a row, should offer some support to the USD/CAD pair. In fact, the dollar rises to a new monthly high and continues to be supported by expectations that the Fed will maintain its tightening policy. Additionally, rising US Treasury yields and recession fears offset mixed US housing market data and favor dollar bulls, supporting the prospects for some buying. down around par.
Traders, meanwhile, may refrain from making aggressive bets ahead of the FOMC’s policy meeting minutes due on Wednesday. Markets have priced in at least a 50 basis point Fed rate hike at the September meeting, and the minutes will be scrutinized for clues as to the possibility of a larger 75 basis point move. Therefore, it would be prudent to wait for a strong follow-up of selling before confirming that the recent recovery from the two-month low hit last week has run its course.
Technical levels
Source: Fx Street
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