• The strong USD bid tone seemed rather unaffected by disappointing US housing market data.
• Slightly better Canadian manufacturing sales offset by the ongoing slide in crude oil prices.
• Investors now look forward to the latest FOMC meeting minutes for a fresh directional impetus.
The USD/CAD pair remained well bid through the early North-American session, albeit retreated few pips following the release of US and Canadian data.
Resurgent US Dollar demand, further supported by a modest uptick in the US Treasury bond yields, helped the pair to snap four consecutive days of losing streak and stage a solid rebound from the 1.2900 neighborhood, over one-week low touched in the previous session.
The strong USD bullish sentiment seemed rather unaffected by the disappointing release of US housing market data, showing a drop in housing starts and building permits to an annualized pace of 1.20 million and 1.24 million respectively.
Meanwhile, data released from Canada showed manufacturing sales contracted by 0.4% m/m in August as compared to a 0.9% growth recorded in the previous month, but was still slightly better than consensus estimates and turned out to be the only factor keeping a lid on any further up-move.
The positive factor, to a larger extent, was offset by the ongoing retracement in crude oil prices, which was seen undermining the commodity-linked currency – Loonie and should help limit any immediate sharp downfall, at least for the time being.
Moving ahead, today’s key focus will remain on the release of the latest FOMC meeting minutes, which might provide fresh clues over the Fed’s rate hike path beyond 2018 and determine the pair’s near-term trajectory ahead of next week’s BoC monetary policy decision.
Technical levels to watch
Immediate resistance is pegged near the key 1.30 psychological mark, above which the pair is likely to aim towards testing the 100-day SMA barrier, currently near the 1.3065 region. On the flip side, the 1.2950-45 region now seems to protect the immediate downside, which if broken might turn the pair vulnerable to slide further towards the very important 200-day SMA support near the 1.2900-1.2895 region.