- USD/CAD bulls got rejected at the 200-day SMA and retreated near the 1.3420 area, still poised for a weekly gain
- US PPI rose to 2.4% YoY in July, higher than expected.
- Higher Oil prices help the CAD trade strong against most of its rivals.
At the end of the week, the USD/CAD was rejected by the 200-day Simple Moving Average (SMA) at 1.3450 and settled near 1.3430. On the one hand, the USD is trading mildly stronger after hot Producer Price Index (PPI) from July figures which fueled a rise in American bond yields, while the CAD got a boost on the back of rising Oil prices.
Markets asses US inflation data and start to place bets on a hike by the Fed in November
US Producer Price Index from July came in higher than expected. The headline figure rose by 0.3% MoM to 0.8% YoY while the core measure advanced 0.3% MoM vs 0.2% expected to a yearly measure of 2.4%.
As a reaction, the US bond yields are seeing gains across the curve. The 10-year bond yield rose to 4.13%, while the 2-year yield stands at 4.87% and the 5-year yielding 4.25%, respectively. In that sense, higher yields can be attributed to investors placing higher bets on a 25 basis point (bps) hike in November’s Federal Reserve (Fed) meeting. As for now, and according to the CME FedWatch tool, those odds stand at 64% in favour of a no hike and nearly 30% in favour of a hike, vs last week's 25%. For the September meeting, the stronger case continues to be the Fed not hiking.
Other data released by the US by the University of Michigan indicated that its Sentiment index rose to 71.2, better than the 71 expected, while 5-year Consumer Inflation Expectations dropped to 2.9%.
On the other hand, Oil prices resumed their upwards path and as it is one of Canada’s main exports, higher energy prices strengthened the CAD. Data-wise, nothing relevant will be released on Friday for the Canadian economy.
USD/CAD Levels to watch
Analysing the daily chart, indicators point at a neutral to the bearish technical outlook for the USD/CAD, suggesting that the bulls are starting to give up. The Relative Strength Index (RSI) points downwards in the bullish territory, suggesting a possible trend reversal, while the Moving Average Convergence (MACD) prints lower green bars. On the weekly chart, the bullish outlook is more evident as the pair will record its fourth-consecutive weekly gain at the end of this session.
Support levels: 1.3350 (100-day SMA),1.3350, 1.3300.
Resistance levels: 1.3450 (200-day SMA), 1.3500,1.3550.
USD/CAD Daily chart
-638273673290295860.png)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.