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  • USD/CAD witnessed an intraday turnaround from one-week tops amid a subdued USD demand.
  • Mixed US macroeconomic data failed to impress the USD bulls or lend any support to the major.
  • Retreating oil prices might undermine the loonie and help limit the downside, at least for now.

The USD/CAD pair remained depressed near daily lows, around the 1.2080 region and had a rather muted reaction to mixed US macro releases.

The pair struggled to capitalize on its early positive move to one-week tops, instead met with some fresh supply near the 1.2140 region and erased a major part of the overnight gains. The downtick was sponsored by a subdued US dollar demand and seemed unaffected by an intraday decline in crude oil prices, which tend to undermine the commodity-linked loonie.

Expectations that the Fed would retain its accommodative monetary policy stance overshadowed a strong pickup in the US Treasury bond yields. Apart from this, a generally positive tone around the US equity futures acted as a headwind for the greenback. Thursday’s rather unimpressive US economic data also failed to impress the USD bulls or lend any support to the USD/CAD pair.

The second estimate of the US GDP print showed that the economy expanded at an annualized pace of 6.4%, just short of market expectations for a modest uptick to 6.5%. Adding to this, the US Durable Goods Orders unexpectedly declined by 1.3% in April, though was largely offset by better-than-expected
Orders ex-transportation, which increased by 1.0% during the reported month.

Separately, the Initial Weekly Jobless Claims fell to 406K during the week ended May 21 as against 425K anticipated and the previous week’s upwardly revised reading of 478K. The data did little to convince investors that the Fed will need to start discussing plans to reduce the pace of bond purchases, which, in turn, kept the USD bulls on the defensive.

It will now be interesting to see if the USD/CAD pair can attract any buying at lower levels or the intraday decline points to the resumption of the recent well-established downward trajectory.

Technical levels to watch