- A broad-based USD weakness prompted some fresh selling around USD/CAD pair.
- Friday’s US/Canadian macro releases did little to provide any meaningful impetus.
- The key focus remains on Trump’s reaction to China’s security law for Hong Kong.
The USD/CAD pair held on to its softer tone through the early North American session and had a rather muted reaction to the US/Canadian macro data.
The pair failed to capitalize on its early uptick to the 1.3100 neighbourhood, instead met with some fresh and dropped to test 100-day SMA support near the 1.3715 region amid a broad-based US dollar weakness. The USD remained depressed and failed to gain any respite from Friday’s mostly weaker-than-expected US macro releases.
Data released this Friday showed an unexpected jump in the US Personal Income, though the positive reading was largely negated by disappointing Personal Spending and Core PCE Price Index. This coupled with a sharp intraday fall in the US Treasury bond yields further contributed to the offered tone surrounding the greenback.
On the other hand, the commodity-linked currency – the loonie – seemed rather unaffected by sliding crude oil prices, instead took cues from not as worse as expected Canadian GDP report. The Canadian economy contracted by 7.2% in March and tumbled 8.2% in the January-March quarter, better than the expected decline of 9% and 10%, respectively.
Meanwhile, the downside remained limited, at least for the time being. Investors now seemed reluctant to place any aggressive bets and preferred to wait on the sidelines ahead of the US President Donald Trump’s news conference on China’s move to tighten control over Hong Kong.
From a technical perspective, bears are likely to wait for a sustained break below the 1.3715-1.3700 support area before positioning for an extension of the pair’s recent depreciating move.
Technical levels to watch