Monday, June 14, 2021
News, Economy, Forex, Forum


USD/CAD remains depressed near multi-year lows post-US/Canadian macro data

USD/CAD remained depressed for the third consecutive session on Friday. A combination of factors might help limit any further losses,…

By financial2020myday , in Forex , at April 30, 2021

USD/CAD remained depressed for the third consecutive session on Friday.
A combination of factors might help limit any further losses, at least for now.
Diverging BoC/Fed monetary policy stance should cap any meaningful bounce.
The USD/CAD pair witnessed some selling during the early North American session and refreshed multi-year lows, around the 1.2265 region in the last hour.

The pair, so far, has struggled to register any meaningful recovery and remained depressed for the third consecutive session on Friday. This also marked the fifth day of a negative move in the previous six, though a combination of factor helped limit any further losses.

The US dollar built on the overnight bounce from the lowest level since February 26 and strengthened across the board amid a generally softer risk tone. The global risk sentiment took a hit after the Chinese PMI indicated the slowing pace of growth in the manufacturing sector.

The data added to the market worries that the ever-increasing COVID-19 cases in some countries – India, Japan and Brazil – could derail the global economic recovery from the pandemic. This, in turn, dented investors’ confidence and drove some haven flows towards the greenback.

The USD held on to its intraday gains following the release of mostly upbeat US macro releases. The annual Core PCE Price Index accelerated to 1.8% in March from 1.4% previous. Adding to this, Personal Income surged surge 21.1%, while Personal Spending increases by 4.2% in March.

From Canada, the monthly GDP print fell short of expectations and came in to show a growth of 0.4% in February. Apart from this, a sharp fall in crude oil prices further held traders from placing bullish bets around the commodity-linked loonie and extended some support to the USD/CAD pair.

Despite the supporting factors, the pair, so far, has been struggling to register any meaningful recovery amid the divergence in monetary policies adopted by the BoC and the Fed. This, in turn, suggests that the path of least resistance for the USD/CAD pair remains to the downside.

That said, overstretched conditions on short-term charts warrant some caution before positioning for any further depreciating move. Hence, it will be prudent to wait for a modest bounce or a near-term consolidation before positioning for an extension of the well-established bearish trend.

Comments


Leave a Reply


Your email address will not be published. Required fields are marked *