USD/CAD is in the hands of the bears although the price attempts to correct from the daily lows. At the time of writing, USD/CAD is trading at 1.3247 between a range of 1.3229 and 1.3347.
A risk-on sentiment in markets on Wednesday have undermined the US dollar’s recent recovery, despite a bet in the Consumer Price Index today.
Prices trended up in the US in July with the headline CPI up 0.6% MoM, this was double the rise expected.
Core CPI also rose 0.6%, its largest rise in nearly 30 years. Clothing prices lifted 1.1% while used cars gained 2.3% and fuel prices shot up 5.6%.
This data and the PPI released a day earlier were both stronger than expected but with the virus still raging in the US it may be some time before there is a sustained improvement in economic activity.,
analysts at ANZ Bank explained.
The loonie has been on the march this month, and in the absence of domestic data, the currency will be highly reliant on geopolitical developments driving risk sentiment.
However, while US stocks were moving to test the 2020 highs, this was despite the fact that Congressional negotiations, relating to aid for Americans suffering the economic fallout of COVID-19 have broken down.
An agreement on the US fiscal stimulus package might have provided some positive spill-over on CAD, which may incidentally need clear signs of slowing US contagion to unlock more upside across the board.
So far, however, it is not to be.
US Treasury Secretary Steven Mnuchin said on Wednesday that the White House and top Democrats in Congress may not be able to reach a deal on coronavirus aid, in the fifth day without talks on the stalemate blocking relief to tens of millions of Americans.