The USD/CAD pair took a brief rise above the 1.28 mark as the week started. But the buyers could not hold the momentum and lost traction. The pair ended the week near mid-1.25, thirty pips above the weekly lows.
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US stocks have gained while the US Treasury yields have gone lower. Commodity currencies have been softer too. This could be due to the impact of Covid, but most probably, it is a standard rebound in risk after Monday’s movement.
The Canadian retail sales data was released on Friday. The figures were stronger than expected. Hence, this is not the reason behind a sell-off in the USD/CAD pair.
Although May was a rough month for Canadian retail sales, it surged up in June. So the data wasn’t bad, but fear of shutdown and other drastic measures to combat the third wave weighed on the retailers in April and May.
The oil market ended the week in the red. Although a big fall in prices saw an upside retracement that provided some support to the Canadian Dollar later this week.
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What to watch next week for USD/CAD?
The next week comes with two major events. CB consumer confidence data is expected on Tuesday. The figures are not expected to surprise the market.
Second is the US federal funds rate and FOMC statement due on Wednesday. We have to look for the tone of the FOMC in their statement. On Friday, we have personal spending and income data as well which includes PCE inflation as well. PCE inflation is a hot variable of inflation measure for the Fed.
Data from Japan is not much significant next week. Some low tier data include BOJ Kuroda’s speech on Monday followed by unemployment rate, industrial production and retail sales data on Friday. However, the market doesn’t expect much from these events.
The other side of the equation has some important data due. It includes Canadian CPI figures due on Wednesday followed by Canadian GDP data due on Friday. Both the events can significantly impact the price of USD/CAD. Canadian GDP data can surprise the market with a figure under -0.3%.
USD/CAD technical weekly outlook: Bears to dominate further
The pair found a huge dip of more than 250 pips this week. The downfall now seems little supported by the 18-day EMA. But the selling pressure is too high. Top reversal and widespread down bars are pointing for more bearish pressure. Volume seems to increase with the decline in prices. Further support lies at 50-day SMA at 1.2365 followed by 100-day SMA at 1.2285.
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