The USDCAD jumped early in the U.S. session after the release of jobless claims and PCE inflation. Both numbers beat expectations and although a decrease in unemployment is welcome, a rise in inflation could alter the recent market dynamics.
The U.S dollar was lower against the Looney this week after hitting stubborn resistance at the 1.3400 level. The revival of U.S. stimulus talks between Democrats and Republicans has hit the dollar, with the likelihood that a second support package would be upwards of $1.5 trillion. The Democrats want a $2.2 trillion relief effort, but they will likely have to lower their expectations to get a deal passed. Either way, an agreement before the election will benefit dollar bears as investors fret about the U.S. debt and government spending.
The U.S. economy now awaits ISM Manufacturing figures today and the outlook is hopeful after Australia, Germany, and the U.K. all saw their own manufacturing come in near expectations today. The dollar will also be driven by tomorrow’s Non Farm Payrolls, but ADP employment and today’s jobless claims both beat expectations so the trend favours a good NFP number.
Some strength in oil boosted the Canadian dollar yesterday but crude actually closed just shy of the $40.00 figure and has fallen almost 2% today to trade near $39.00. The price of oil will continue to be a worry for the CAD with the recent inventory builds and fears over reduced demand due to the lockdown restrictions.
USDCAD Technical Outlook
USDCAD jumped higher on the economic data early in the U.S. session but yesterday’s sell-off is a worry that the USD has run out of steam. The dollar will have to get above 1.3400 to see further gains, while a pullback to the lows could happen with a close below the 50-day moving average. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.
USDCAD Daily Chart