🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Canadian Dollar Weakens As Crude Slides, Equities Decline, Economic Data Weakens

Published 2023-08-16, 06:06 p/m
© Reuters.
USD/CAD
-

By Ketki Saxena

Investing.com --The Canadian dollar weakened to a more than two-month low against its U.S. counterpart today, as the loonie contended with a triple whammy today: risk-off sentiment in equities a decline in crude prices, and weak economic data. Meanwhile, hawkish minutes from the Federal Reserve supported treasury yields and the US dollar.

In economic data, Canadian housing starts slipped by 10% in July compared with June, which Marc Desmoreux principal economist at Desjardins notes adds to  "downcast indicators suggest the painful medicine of higher interest rates is working to cool down economic growth and bring price pressures to heel"; and which are likely to keep the Bank of Canada on the sidelines in September.

Separate data also showed that wholesale trade fell by 2.8% in June from May.

The crude-linked loonie was also pressured by a decline in crude prices, which are dealing with the prospect of three-year high US production in addition, a large drawdown in US stockpiles, and a deteriorating demand prospect as China's economy weakens.

Meanwhile, the US dollar gained against a basket of currencies as the Federal Open Market Committee (FOMC) released July monetary policy minutes with a distinctly hawkish bent. The minutes expressed that inflation risks remain tilted to the upside, and that further rate hikes could be necessary.

On a technical level for the pair, analysts at Forex Live note, "On the daily chart below, USD/CAD has confirmed a breakout above the falling trendline from March. This is offering an increasingly bullish technical bias. From here, immediate resistance is the 61.8% Fibonacci retracement level at 1.3568. A confirmatory upside push from there subsequently places the focus on the April high of 1.3668."

"In the event of a turn lower, immediate support appears to be the midpoint of the Fibonacci retracement level at 1.3477. Just below that is that former falling trendline, which could hold as new support. If not, extending a drop through the trendline offers an increasingly bearish technical bias, opening the door to a revisit of the 1.3093 – 1.3139 support zone."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.