- USD/CAD met with some fresh supply on Friday and turned lower for the third straight session.
- Positive oil prices undermined the loonie, which got an additional boost from upbeat macro data.
- A subdued USD price action further contributed to the intraday selling bias surrounding the pair.
The USD/CAD pair remained depressed near session lows, around mid-1.3000s and had a rather muted reaction to Canadian monthly retail sales figures.
The pair failed to capitalize on its early uptick, instead met with some fresh supply just ahead of the 1.3100 mark and turned lower for the third consecutive session on Friday. The downtick also marked the fifth day of a negative move in the previous six and was sponsored by an uptick in crude oil prices, which tend to underpin demand for the commodity-linked currency – the loonie.
The Canadian dollar was further supported by Friday’s mostly upbeat domestic data, which showed that headline retail sales recorded a growth of 1.1% in September as against 0.2% expected and 0.4% previous. Adding to this, sales excluding autos also surpassed consensus estimates and increased 1% during the reported month, albeit did little to provide any impetus to the USD/CAD pair.
On the other hand, the US dollar extended its sideways consolidative price action amid conflicting signals about the US COVID-19 relief package. Reports indicated that US Senate Republican and Democrat leaders had agreed to resume negotiations on coronavirus stimulus measures. The positive development, to a larger extent, was offset by the US Treasury Secretary Steven Mnuchin’s decision to end some of the pandemic relief for struggling businesses.
Apart from this, concerns about the economic fallout from the imposition of new COVID-19 restrictions in several US states have been fueling speculations for additional monetary easing by the Fed. This, along with a weaker tone surrounding the US Treasury bond yields, kept the USD bulls on the defensive and further contributed to the offered tone surrounding the USD/CAD pair.
From a technical perspective, the pair, so far, has managed to hold its neck above weekly swing lows. This, in turn, makes it prudent to wait for some strong follow-through selling before traders start positioning for any further near-term depreciating move.
Technical levels to watch
Share
