“¢ Disappointing Canadian retail sales data prompted some short-covering move.
“¢ The prevalent USD selling bias/surging oil prices kept a lid on any further gains.
“¢ Focus remains on the release of FOMC meeting minutes, later in the day.
The USD/CAD pair reversed a dip to the 1.30 neighborhood, or two-week lows, and spiked around 30-35 pips post-Canadian retail sales data, albeit quickly retreated few pips thereafter.
The pair kept losing ground on Wednesday and was being weighed down by a fresh wave of US Dollar selling pressure, triggered by the latest US political headlines. The ongoing slide in the US Treasury bond yields made it worst for the USD bulls and exerted some additional downward pressure on the major.
The bearish pressure receded after the latest Canadian monthly retail sales data fell short of market expectations and came in to show a contraction of 0.2 in June. The weaker reading came after last month’s solid growth of 2.2% and prompted some short-covering move.
The up-move, however, lacked any strong follow-through and remained capped below a previous strong support break-point, now turned resistance, near the 1.3050-55 region amid the ongoing upsurge in crude oil prices, which tend to underpin demand for the commodity-linked currency – Loonie.
It would now be interesting to see if the pair is able to find any fresh buying interest or continues with its near-term bearish slide as the focus now shifts to today’s key event risk – the release of FOMC meeting minutes, later during the US trading session.
Technical levels to watch
On a sustained move beyond the 1.3050-55 immediate hurdle, the pair is likely to aim towards reclaiming the 1.3100 handle before eventually darting towards 1.3160-70 supply zone. On the flip side, weakness below the 1.30 handle is likely to find support near 100-day SMA, around the 1.2985-80 region, which if broken should pave the way for an extension of the recent downfall.
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