- USD/CAD reversed its direction after rising to multi-week highs.
- US Dollar Index retreats to 90.50 area in the American session.
- US data showed that economy grew by 4% in Q4.
The USD/CAD pair rose to its highest level since December 24 at 1.2881 on Thursday but reversed its course during the American trading hours. As of writing, the pair was virtually unchanged on the day at 1.2798.
DXY turns south amid surging US stocks
The broad-based USD strength allowed the pair to preserve its bullish momentum during the first half of the day. The risk-averse market environment provided a boost to the greenback and the US Dollar Index (DXY) rose to a daily high of 90.86. However, a positive shift witnessed in sentiment after Wall Street’s opening bell made it difficult for the USD to continue to outperform its rivals. At the moment, the DXY is down 0.1% on the day at 90.55 and the S&P 500 Index is up nearly 2%.
Earlier in the day, the data published by the US Bureau of Economic Analysis showed that the economic activity in the fourth quarter grew by 4% on a yearly basis. This reading came in line with analysts’ estimate and helped market mood turn upbeat. Additionally, the weekly Initial Jobless Claims declined by 67,000 to 847,000 and the trade deficit in December fell by $3 billion $82.5 billion.
Meanwhile, crude oil continues to trade in a tight range on Thursday, allowing the USD’s market valuation to remain the primary driver of USD/CAD’s movements. The barrel of West Texas Intermediate is currently posting small daily losses at $52.50.
On Friday, November GDP data from Canada and the Personal Consumption Expenditures Price Index figures from the US will be looked upon for fresh impetus.
Technical levels to watch for
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