- A combination of factors assisted USD/CAD to regain some positive traction on Wednesday.
- A pullback in oil prices undermined the loonie, softer risk tone benefitted the safe-haven USD.
- Upbeat US Durable Goods Orders remained supportive of the bid tone surrounding the USD.
The USD/CAD pair refreshed daily tops in the last hour, with bulls now eyeing to reclaim the 1.3200 mark post-US macro data.
A combination of supporting factors assisted the pair to regain some positive traction on Wednesday and recover a part of the previous day’s sharp pullback of over 70 pips. a modest pullback in oil prices undermined demand for the commodity-linked currency – the loonie – and extended some support to the USD/CAD pair.
On the other hand, the US dollar attracted some haven flows amid a softer tone around the equity markets. This coupled with some strong follow-through upsurge in the US Treasury bond yields further impressed the USD bulls and remained supportive of the USD/CAD pair’s positive move through the early North American session.
Meanwhile, the intrada USD buying picked up pace following the release of upbeat US Durable Goods Orders, which recorded a strong MoM growth of 11.2% in July. The reading was much better than the previous month’s upwardly revised reading of 7.7% and surpassed consensus estimates of 4.3% by a big margin.
Core durable goods orders, which exclude transportation items, rose 2.4% during the reported month as against the 4% growth recorded in June and 2% expected. Meanwhile, Non-defence capital goods orders (excluding aircraft and parts) matched market expectations and climbed 1.9% versus June’s 4.3% gain (revised higher).
It, however, remains to be seen if the USD/CAD pair is able to capitalize on the move or runs into some fresh supply at higher levels. Investors might be inclined to lighten their positions ahead of the Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium. This, in turn, might prompt some repositioning trade and infuse some volatility.
Technical levels to watch
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