After a two-day rise, the USD/CAD seesaws around the weekly top.
Prior to the release of the day’s important statistics, risk appetite begins to wane.
The US dollar remains high because to Covid and Fedspeak, but WTI fails to support the CAD bulls.
Quality headlines become the key as China PMI, US ADP, and Canadian GDP adorn the calendar.
In a quiet Asian session on Wednesday, the USD/CAD eases to 1.2396 after a two-day rise to the weekly high. The Loonie’s recent advances could be linked to the US dollar’s recent increases, which have been fueled by fear and positive US statistics. However, the recent pullback appears to be based on a lack of important data/events.
The coronavirus (COVID-19) Delta variant has recently become a major source of anxiety for global markets, putting a safe-haven bid on the US dollar. Mixed remarks from US Federal Reserve (Fed) policymakers, as well as good data on consumer sentiment and housing, favored the greenback bulls.
The covid strain appears to have impacted Australia, Thailand, and Indonesia hard in recent days, and the fact that these countries are similarly slow to respond fuels the rush to seek protection. Fedspeak, on the other hand, fails to defend easy money policies in the face of upbeat statistics. Nonetheless, even if rejecting near-term rate hikes and painting a long road to employment recovery, Fed Governor Christopher Waller’s latest remarks could be taken as supportive of the reduction.
It’s worth noting that OPEC+ headlines ahead of Thursday’s meeting support WTI prices, Canada’s main export, but the USD/CAD hasn’t recovered from a one-week low as traders are enticed by the greenback’s strength.
Following the indecisive closings of Wall Street benchmarks, S&P 500 Futures post modest gains. Furthermore, as of press time, the US 10-year Treasury rate was hovering about 1.47 percent.
Moving on, China’s NBS Manufacturing PMI for June, which is predicted to be 51 versus 50.8, could provide immediate direction for USD/CAD, but risk appetite-related headlines will become more relevant. Following that, it will be vital to keep an eye on Canada’s monthly GDP for April, which is predicted to be -0.8 percent versus +1.0 percent previously, as well as the US ADP Employment Change for June, which is expected to be 600K versus 978K previously.
USD/CAD bulls will need a daily close above the 100-day SMA level of 1.2400 in order to target the five-month-old resistance line near 1.2465. Otherwise, a pullback to the 1.2270 horizontal support, which has been in place since late April, cannot be ruled out.
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