- USD/CAD staged a modest recovery from multi-month lows set on Thursday.
- The USD struggled to preserve its early gains and kept a lid on any strong gains.
- Friday’s mixed US retail sales figures failed to provide any meaningful impetus.
The USD/CAD pair held on to its modest gains through the early North American session, albeit retreated around 15-20 pips from daily tops post-US macro data.
The pair to gain some positive traction on the last day of the week and stage a modest recovery from near six-month lows, or sub-1.3200 levels set on Thursday. The uptick was supported by a mildly softer tone surrounding crude oil prices, which tend to undermine the commodity-linked loonie, and an intraday US dollar rebound.
The USD, however, struggled to capitalize its early uptick, instead met with some fresh supply at higher levels amid the uncertainty over the next round of the US fiscal stimulus measures. The greenback was further pressured by a pullback in the US Treasury bond yields, led by a turnaround in the global risk sentiment.
Meanwhile, Friday’s mixed release of the US monthly Retail Sales report failed to impress the USD bulls or provide any meaningful impetus to the USD/CAD pair. Data published by the US Census Bureau revealed that retail sales rose by 1.2% MoM in July, short of consensus estimates pointing to an increase of 1.9%.
The weaker headline number, to a larger extent, was offset by an upward revision of the previous month’s reading to 8.4% from 7.5% reported earlier. Adding to this, sales excluding autos also came in to show a better-than-expected growth of 1.9% during the reported month. The closely watched Retail Sales Control Group climbed 1.4% in July as against 0.8% anticipated.
Friday’s US economic docket also highlights the release of the Michigan Consumer Sentiment Index for August. The data, along with the broader market risk sentiment might influence the USD price dynamics and produce some short-term trading opportunities. The key focus, however, will remain on a crucial weekend meeting between the US and Chinese trade officials.
Technical levels to watch
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