- The USD remains well support by Wednesday’s hawkish cut by the Fed.
- Sliding Crude Oil prices undermined Loonie and remained supportive.
- Thursday’s US ISM PMI eyed for some short-term trading opportunities.
The greenback maintained its strong bid tone on Thursday, lifting the USD/CAD pair to over one-month lows, around the 1.3215-20 region during the early European session.
A combination of supporting factors helped the pair to continued gaining positive traction for the second consecutive session on Thursday and built on its overnight solid bounce of over 100-pips from the 1.3100 neighbourhood, touched in the aftermath of better-than-expected monthly Canadian GDP growth figures.
A strong follow-through US Dollar buying interest, supported by the fact that the Fed Chair Jerome Powell described Wednesday’s rate cut as a mid-cycle adjustment of policy and not necessarily the beginning of a series of rate cuts, turned out to be one of the key factors driving the pair higher.
This coupled with a sharp pullback in Crude Oil prices further undermined demand for the commodity-linked currency – Loonie and remained supportive of the ongoing positive momentum to the highest level since June 21.
The lack of commitment of future rate cuts by the Fed negatively impacted investor sentiment and weighed on perceived riskier assets – including Oil, which fell around 1.5% on Thursday despite a bigger-than-expected fall in US inventories.
Meanwhile, Thursday’s up-move could further be attributed to some technical buying above the 1.3200 round figure mark. Hence, a follow-through appreciating move, back towards challenging the very important 200-day SMA, now looks a distinct possibility.
Later during the early North-American session, the US economic docket – highlighting the release of ISM manufacturing PMI, will now be looked upon for some short-term trading impetus, albeit the key focus will remain on Friday’s closely watched US monthly jobs report.
Technical levels to watch
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