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  • USD/CAD stays pressured near intraday low while extending pullback from 1.3202.
  • Risk reset in Asia, oil price consolidation helps keep the bears hopeful below the early August lows.
  • BOC’s Macklem part ways with ECB and RBNZ’s outlook over the currency level.
  • US CPI will be the key ahead of next week’s FOMC.

USD/CAD refreshes intraday low to 1.3170, losing 0.17% on a day, while heading into Friday’s European session. With the absence of fresh catalysts, the market’s consolidation plays its role to weigh on the quote. On Thursday, the broad US dollar gains joined downbeat comments from the Bank of Canada (BOC) Governor Tiff Macklem to propel the prices that help defy an eight-week-old downtrend.

The news of receding tension between India and China stood beside Tokyo’s optimism, as far as the coronavirus (COVID-19) is concerned, to trigger the latest shift in the market’s risk-tone sentiment. The mood still ignores US President Donald Trump’s tough stand against TikTok and the recent cancellation of over 1,000 visas from Beijing.

It should, additionally, be noted that the oil price pullback also dragged the USD/CAD prices as crude becomes the highest export earner of Canada. While retracement in the US dollar can be quoted as a reason for the corrective bounce in commodities, Saudi Arabia’s hike in domestic oil prices and Iraq’s debate over an exemption from OPEC+ oil supply cuts adds gains to the black gold.

Amid all these catalysts, the US 10-year Treasury yields stay sluggish around 0.68% whereas the S&P 500 Futures add 0.75% to 3,365 by the press time. Also, stocks in Asia-Pacific are trading mixed with Japan’s Nikkei 225 adding over 0.70% with the exact amount of looses printed by Australia’s ASX 200 as we write.

It should be noted that the pair traders remain worried over the BOC’s next move, even as it showed readiness to act while observing Governor Macklem’s emphasis to the price level when announcing the stimulus if any. On the contrary, the Fed is clear over its future outlook and hence the USD/CAD may witness further strength.

While looking for the clues, US Consumer Price Index (CPI) for August, expected 1.2% versus 1.0%, can act as today’s trigger for the upside.

Read: US CPI August Preview: Inflation gets demoted, again

Technical analysis

Bears remain hopeful unless witnessing a daily close beyond August 05 low near 1.3330/35. As a result, expectations of witnessing 1.3000 back to the chart are still on the table.