The USD/CAD is under pressure
Jason Lubin December 31, 2020 11:00 PM
If the USD/CAD finds support at 1.2690, it could be the beginning of trading range.
The US Dollar was bullish against most of its major pairs on Thursday with the exception of the AUD, CAD and GBP. On the US economic data front, Initial Jobless Claims dropped to 787K for the week ending December 26th (835K expected), from a revised 806K in the previous week. Finally, Continuing Claims fell to 5,219K for the week ending December 19th (5,370K expected), from a revised 5,322K in the week before.
On Friday, US markets will be closed to observe New Years Day.
The Euro was bearish against all of its major pairs. In Europe, no major economic data was released.
The Australian dollar was bullish against most of its major pairs with the exception of the GBP.
Regarding the week's U.S. economic data front:
Wholesale Inventories fell 0.1% on month in the November preliminary reading (+0.6% expected), compared to a revised +1.2% in the October final reading.
Market News International's Chicago Business Barometer unexpectedly rose to 59.5 on month in December (56.3 expected), from 58.2 in November.
Finally, Pending Home Sales declined 2.6% on month in November (0% expected), compared to a revised -0.9% in October.
From a technical point of view, on a daily chart, the USD/CAD currency pair sold off this week after its short-term rally following the upside breakout from a descending broadening wedge pattern last week. The simple moving averages (SMAs) are arranged in a bearish manner, as the 20-day SMA is below the 50-day SMA. The overall bias remains bearish, however the USD/CAD could find support at 1.2690 again and bounce towards 1.2955. If this occurs it is likely the pair could move sideways in a consolidation range. If the pair breaks out below 1.2690, then its next support level would be 1.2530. If the pair breaks out above 1.2955, then the pair could rally towards 1.3120.
Source: GAIN Capital, TradingView
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.