USD/CAD bounces off 100-day SMA on sluggish China data

• USD/CAD trades near 1.3315 while heading into European session on Thursday.
• Sluggish print of China’s industrial production triggered pullback from 100-day SMA.
• Few second-tier data-points and the US-China trade talks are still on the radar.

USD/CAD is taking the bids around 1.3315 ahead of London open on Thursday. The pair dropped to a week’s low on yesterday as prices of Crude, Canada’s main export, rallied to four-month high while USD’s data-dependant weakness also played its role. However, pair sellers couldn’t remain in command for long as the early-day release of China’s retail sales and industrial production dragged the Loonie down.

The USD/CAD pair took a U-turn from 100-day simple moving average during early Thursday after headline data from China validated further economic weakness of the dragon nation. The data report repeated the retail sales (YoY) growth of 8.2% beating 8.1% forecast but couldn’t lure commodity buyers as industrial production slumped to a multi-year low of 5.3% on a yearly basis versus 5.5% market consensus and 5.7% prior.

Canada being one of the commodity-linked economy, changes in commodity front and/or affecting the world’s largest commodity user, i.e. China, could direct Canadian Dollar (CAD) moves.

The pair slipped to the week’s low during Wednesday as Crude prices surged to four-month high after EIA reported surprise drawdown in weekly inventory levels by 3.9 million barrels against a forecast of 2.66 million increase.

Additionally, US Dollar (USD) stretched its recent downward trajectory on mixed data concerning durable goods orders and producer prices index (PPI).

Looking forward, a weekly print of the US initial jobless claims and monthly new home sales, coupled with Canada’s new housing price index (NHPI), would gain market attention. The US jobless claims may rise to 225K from 223K while new home sales for the January month could print 0.620M mark against 0.621M earlier. Also, Canada’s NHPI may remain unchanged at 0.0%.

Other than data dynamics, progress at the US-China trade talks, where the US lawmakers are likely raising bars for a successful deal, could also direct near-term USD/CAD moves.

USD/CAD Technical Analysis

While 100-day SMA limits immediate downside around 1.3300, pair’s bounce to 1.3340 and 1.3375/80 can’t be denied.

Alternatively, a D1 closing under 1.3300 may help sellers to aim for 1.3260 comprising 50-day SMA, a break of which can recall 1.3200 on the chart.