USD/CAD bears are rejoicing as the US Dollar relinquishes its grip on the weekly high, dampened by sluggish oil prices in early Thursday morning trading in Europe.
The Loonie pair has now dropped for the fourth consecutive day, hovering around 1.3145 at the time of writing, after hitting a weekly low of 1.3133. This comes after a remarkable recovery on Friday from the lowest levels seen since September 2022.
The US Dollar Index (DXY) is down by 0.25% intraday, testing the critical 100.00 mark, despite bouncing back for two days from its lowest level since April 2022. The greenback’s performance seems to shrug off negative US housing data and mixed concerns about the Federal Reserve, while also dismissing the optimism seen at US banks.
US Building Permits for June recorded a contraction of 3.7%, following a previous increase of 5.6% (revised), while Housing Starts slumped by 8.0% for the same period, down from the revised prior figure of 15.7%.
Conversely, slower growth in US Retail Sales for June was offset by positive details, supporting the Federal Reserve’s decision to maintain higher interest rates for a longer period and announce a 0.25% rate hike in July.
This triggered a corrective bounce for the US Dollar, which rebounded from a 15-month low on Tuesday and managed to retain some recovery on Wednesday, before experiencing the latest retreat.
Meanwhile, WTI crude oil remains uncertain, hovering near $75.40, as it struggles to find a clear direction following a reversal from a one-week high the previous day. The current indecisiveness in black gold’s price could be attributed to conflicting factors, including a lower-than-expected inventory draw and the influence of a softer US Dollar.
In addition, fresh concerns arise over the US-China tensions, sparked by comments from a Chinese diplomat and the US House of Representatives’ move regarding outbound investments and AI chips, which appears to influence the USD/CAD bears in the recent market sentiment.
It’s important to note that the mixed concerns surrounding the Federal Reserve’s actions in 2023, despite confirming the July rate hike, stand in contrast to the Bank of Canada’s (BoC) hawkish stance, fueling hope for USD/CAD bears.
Looking ahead, intraday traders of the USD/CAD pair may be entertained by second-tier employment and housing indicators from both the US and Canada, ahead of Friday’s release of Canadian Retail Sales data and the next week’s critical Federal Reserve monetary policy meeting.
Additionally, short-term movements of the Loonie pair will be influenced by headlines concerning the Fed and China, making them worth observing.
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