- A combination of factors exerted pressure on USD/CAD for the second straight session.
- The post-FOMC USD selling bias remained unabated on disappointing US macro data.
- A modest uptick in oil prices underpinned the loonie and contributed to the offered tone.
The USD/CAD pair maintained its heavily offered tone through the early North American session and was last seen hovering around the 1.2475-80 region, few pips above two-week lows.
The pair extended the previous day’s rejection slide from the very important 200-day SMA and witnessed some follow-through selling for the second consecutive session on Thursday. The USD/CAD pair has now confirmed a bearish break below the 1.2525-20 support, marking the lower end of a one-week-old trading range and was pressured by a combination of factors.
The US dollar continues to be weighed down by the Fed Chair Jerome Powell’s dovish turn on Wednesday, emphasising that they were some ways away from substantial progress on jobs. Powell was also cautious about tapering and said that policymakers discussed some details, but it will take a few more meetings to get into it, which, in turn, weighed on the greenback.
Apart from this, a generally positive mood around the equity markets and disappointing US macro releases exerted some additional downward pressure on the safe-haven greenback. The first estimate showed that the US economy expanded by 6.5% annualized pace during the April-June period, way below consensus estimates pointing to a growth of 8.5%.
Adding to this, the US Initial Weekly Jobless Claims fell less than anticipated to 400K during the week ended July 23 as against the previous week’s upwardly revised reading of 424K. The data reaffirmed speculations that the Fed will retain its ultra-lose monetary policy stance for a longer period and did little to provide any respite to the USD bulls.
On the other hand, a mildly positive tone around crude oil prices underpinned the commodity-linked loonie. This was seen as another factor that contributed to the USD/CAD pair’s ongoing decline to the lowest level since July 14. A subsequent slide below mid-1.2400s will set the stage for an extension of the depreciating move towards the 1.2400 round-figure mark.
Technical levels to watch