• The CAD continues to be weighed down by disappointing Canadian data/weaker oil prices.
• A modest pickup in the USD demand, despite weaker US bond yields, remained supportive.
The USD/CAD pair caught some fresh bids on Thursday and now seems headed back towards 2-1/2 week tops set in the previous session.
On Wednesday, the pair managed to reverse an early dip to the 1.3300 handle and rallied around 65-pips in reaction to the disappointing Canadian monthly retail sales data, showing a decline of 0.9% in November.
The commodity-linked Loonie was further weighed down by a modest pull-back in crude oil prices, though some renewed US Dollar weakness failed to assist the pair to build on its goodish intraday bounce.
Oil prices lost some additional ground on Thursday amid lingering concerns over global economic growth, which coupled with some USD strength helped the pair regain positive traction and climb above mid-1.3300s.
However, concerns over the US government shutdown, yet-unresolved US-China trade dispute and dovish Fed expectations might keep the USD bulls on the defensive and contribute towards capping strong gains.
Hence, it would be prudent to wait for a strong follow-through buying before confirming that the pair might have already bottomed out in the near-term and positioning for any further near-term appreciating move.
Technical levels to watch
Any subsequent up-move might now confront immediate resistance near the 1.3400 handle, above which the momentum could further get extended towards the 1.3430-40 supply zone. On the flip side, weakness back below the 1.3340-35 region might continue to find some buying interest near the 1.3300 handle, which if broken might accelerate the fall further towards mid-1.3200s.