“¢ NAFTA optimism continues to benefit CAD and keeps exerting downward pressure.
“¢ Persistent USD weakness/technical selling further aggravates the bearish downfall.
“¢ Finds some support following the release of upbeat US consumer confidence data.
The USD/CAD pair kept losing ground through the early North-American session and momentarily slipped below the 1.2900 handle in the last hour.
The Canadian Dollar continued benefitting from the Mexico-US bilateral trade agreement, which now seems to have fueled optimism over progress towards the renegotiation of the North American Free Trade Agreement.
This coupled with heavy selling surrounding the US Dollar, despite a goodish pickup in the US Treasury bond yields, kept exerting downward pressure and dragged the pair to its lowest level since June 6.
Today’s steep decline for the third consecutive session could further be attributed to some technical selling, especially after overnight bearish close below 100-day SMA for the first time since April 20.
The selling pressure now seems to have abated, at least for the time being, with the pair quickly recovering around 30-40 pips from an intraday low level of 1.2888 following the upbeat release of Conference Board’s consumer confidence index, coming in at 133.4 for August, the highest level since November 2000.
It would now be interesting to see if the pair is able to attract any follow-through buying interest or continues with its bearish trajectory as the market focus now shifts to the upcoming US-Canada trade talks next week.
Technical levels to watch
Any subsequent slide back below 1.2900 handle now seems to get extended towards 1.2870-65 intermediate zone en-route the very important 200-day SMA support near the 1.2845-40 region. On the flip side, recovery attempts might now confront fresh supply near the 1.2955-60 region, above which the pair is likely to aim towards reclaiming the key 1.30 psychological mark.
Share
