By Ketki Saxena
Investing.com -- The Canadian dollar weakened against its US counterpart for the fifth consecutive day, as risk aversion remained dominant following China's weakening economic data and property sector woes.
The latest impetus on the China front is Evergrande's Chapter 15 filing for bankruptcy protection in the U.S. after it revealed more than US$300 billion in liabilities a restructuring of over $31 billion.
Evergrande's declaration follows concerns around another property sector player - Country Garden, China's top private real estate developer which sought an unprecedented delay in payment for a private domestic bond following trading suspension in eleven such bonds.
Meanwhile, the safe-haven greenback was boosted by investors' flight to safety on China woes, hawkish Federal Reserve meeting minutes, and robust US economic data this week including retail sales above estimates and a robust labor market - which continue to support the higher for longer Fed narrative.
. On a technical level for the pair, analysts. at FX Street note, "The USD/CAD bias remains upward as price action cleared the 200-day Moving Average (DMA) at 1.3451, though it faltered to clear the May 30 daily low turned resistance at 1.3567, which once reclaimed, as the USD/CAD pair would rally towards the May 26 swing high at 1.3654."
"If that level is cleared, the year-to-date (YTD) high would be up for grabs at 1.3862."
On a fundamental level for the pair looking ahead, analysts at CIBC (TSX:CM) note that "Weak risk mood and marginally lower energy prices are enough to keep the CAD tone defensive for the moment while relatively stable short-term spreads may act as something of an anchor for the CAD. "
They do add the caveat that in the near term,"There is some evidence on the short-term chart to suggest that the USD rally is losing some momentum; price action over the second half of the week has topped out in the mid-1.35s and the broader rally in the USD is becoming confined to a narrowing, upward-sloping range, a bearish wedge pattern. But there is no obvious sign of weakness in the USD at this point."