- Philly Fed Manufacturing Index and Housing Price Index readings disappoint on Thursday.
- The US Dollar Index turns negative near 94.70.
- WTI recovers to $65 ahead of OPEC summit.
The USD/CAD pair retraced its daily gains in the last hour and fell to a session low of 1.1295 with the initial market reaction to dismal macroeconomic data releases from the United States. As of writing, the pair was trading at 1.3310 and was virtually unchanged on the day.
Today’s data showed that the Philly Fed Manufacturing Index slumped to 19.9 in June from 34.4 in May and the Housing Price Index rose by only 0.1% in April to miss the market expectation of 0.3%. The US Dollar Index, which was able to reach a fresh 2018 high at 95.22 earlier in the day, erased its daily gains and was last seen at 94.70, where it was down 0.1% on the day. Furthermore, the 10-year T-bond yield in the U.S. turned negative below the 2.92% mark and weighed on the buck as well.
On the other hand, crude oil prices, which have been the primary driver of the CAD’s market valuation since the start of the week, are making a modest recovery with the barrel of West Texas Intermediate recovering back above $65. However, latest comments from Saudi Arabia’s Oil Minister Al-Falih heightened the expectations of a supply increase.
Ahead of tomorrow’s critical Vienna summit, Al-Falih argued that an oil output increase of 1 million barrels per day would be a good target to work with. If OPEC headlines continue to pressure crude oil prices, the CAD could have a difficult time staying resilient against the USD.
Technical outlook
Despite this recent fall, the RSI indicator on the daily chart continues to float above the 70 mark, suggesting that the pair remains technically overbought. On the downside, a daily close below 1.3300 (psychological level) could allow the pair to extend its downward correction toward 1.3200 (Jun. 19 low/psychological level) and 1.3160 (Jun. 18 low). On the upside, resistances are located at 1.3335/40 (daily high/Jun. 21, 2017, high), 1.3400 (psychological level) and 1.3470 (Jun. 12, 2017, high).
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