- Annual core-CPI in Canada rises more than expected in August.
- US Dollar Index recovers above in the NA session.
- Crude oil rallies with WTI rising to mid-$71s.
After advancing to a fresh daily high at 1.2945 in the early NA session, the USD/CAD pair lost its traction and erased the majority of its gains. At the moment, the pair was trading at 1.2910, adding only 7 pips on a daily basis.
Earlier today, Statistics Canada reported that the inflation, measured by the CPI, rose 2.8% in August on a yearly basis following July’s reading of 3% and matched the market expectation. Furthermore, the Bank of Canada’s annual core-CPI, which strips food and energy costs, rose 1.7% to beat the analysts’ estimate of 1.4%. A separate publication revealed that retails sales increased by 0.3% in July to fall short of the market consensus of 0.4%.
Despite the upbeat data, a strengthening greenback pushed the pair higher. Boosted by a sharp fall seen in the GBP/USD pair, the US Dollar Index rose to a session top at 94.33 before making a downward correction. At the moment, the index is up 0.3% on the day at 94.20. In the meantime, the IHS Markit reported that the business activity in the manufacturing sector in the U.S. expanded at a stronger-than-expected pace in September while the service sector lost momentum.
On the other hand, a robust rally witnessed in crude oil prices helped the commodity-sensitive loonie retrace its losses vs the buck. As of writing, the barrel of West Texas Intermediate was up 2.2% on the day at $71.70.
Technical levels to consider
The initial support for the pair aligns at 1.2885 (daily low) ahead of 1.2855 (Jun. 6 low) and 1.2815 (May 31 low). On the upside, resistances are located at 1.2930 (200-DMA), 1.3000 (psychological level) and 1.3055 (20-DMA/50-DMA).
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