- Resurgent USD demand assisted USD/CAD to regain positive traction on Tuesday.
- Mixed US economic data did little to provide any meaningful impetus to the pair.
- Bullish crude oil prices failed to benefit the loonie or hinder the intraday move up.
The USD/CAD pair shot to fresh one-month tops heading into the North American session, with bulls now awaiting a sustained move beyond the 1.2200 mark post-US macro data.
The pair attracted some dip-buying near the 1.2130 region on Tuesday and built on its recent bounce from the vicinity of the key 1.2000 psychological mark, or multi-year lows touched earlier this month. The intraday positive move exclusively sponsored by a goodish pickup in the US dollar demand and seemed unaffected by the ongoing bullish run in crude oil prices, which tend to underpin the commodity-linked loonie.
The greenback remained supported by expectations of a slightly less dovish Fed. Investors now seem worried about rising inflationary pressures and might have already started pricing in the prospects for an earlier stimulus withdrawal. The speculations were further fueled by the hotter-than-expected US Producer Price Index, which rose 0.8% MoM in May and 6.6% on a yearly basis. This, in turn, continued acting as a tailwind for the greenback.
Separately, the US monthly Retail Sales fell short of market expectations and dropped 1.3% MoM in May. This, however, was largely offset by an upward revision of the previous month’s reading to show a solid growth of 0.9% as compared to the previous estimate of a flat reading. Meanwhile, excluding autos, core retail sales and the closely watched Retail Sales Control Group fell 0.7% as against market expectations for +0.2% and -0.6%, respectively.
Tuesday’s US economic docket also features the release of Empire State Manufacturing Index and Industrial Production data, though is unlikely to provide any meaningful impetus. Traders now seemed reluctant to place any aggressive bets and preferred to wait on the sidelines for a fresh catalyst from the FOMC monetary policy decision on Wednesday.
Technical levels to watch
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