The USD/CAD pair was closed at 1.32188 after placing a high of 1.32266 and a low of 1.31328. Overall the movement of the USD/CAD pair remained bullish throughout the day. The USD/CAD pair dropped to its lowest level since the second week of the January 2020in early trading session, but in a later session, it rose and recovered all of its previous day's losses on Wednesday.
The positive move behind the USD/CAD pair was not only because of the strong US dollar but also the Canadian dollar's weakness amid negative macroeconomic data. The declining crude oil prices also helped the upward trend in the USD/CAD pair n Wednesday.
At 17:30 GMT, the Consumer Price Index in July dropped to 0.0% from June's 0.8% and fell short of the expected 0.4% and weighed on the Canadian dollar. The Common CPI for the year also dropped to 1.3% from forecasted1.6% and the previous 1.4% and weighed on the Canadian dollar. The Median CPI for the year also declined to 1.9% from the anticipated 2.0% and weighed on the Canadian dollar.
The Trimmed CPI for the year fell short of expectations of 1.8% and came in as 1.7% compared to the previous 1.8% and weighed on the Canadian dollar. However, the Wholesale Sales in June from Canada rose to 18.5% from the forecasted 10.4% and supported the Canadian dollar. At 17:32 GMT, the Core CPI for July remained flat at -0.1% from Canada.
The poor than expected CPI data from Canada gave a push to USD/CAD prices on the day and helped the USD/CAD pair to recover all of its losses from Tuesday.
On the WTI Crude Oil front, the crude oil dropped on Wednesday and remained in $42 territory as the US Crude oil inventories for the previous week increased from the expectations of -2.9M and came in as -1.6M. The declining crude oil prices weighed on the Canadian dollar and added gains in the USD/CAD pair.
Meanwhile, the US dollar remained stable across the board after the Trump administration proposed a new stimulus relief bill of $ 500 billion amount instead of a $1-3 trillion package and raised hopes in the market. However, the FOMC meeting minutes were also supportive of the US dollar as the policymakers suggested cap bond yields.
The US Dollar Index (DXY) rose above 93 level, and the US Treasury yield for a 10-year note also rose by 0.9% and added strength to the US dollar. It pushed the USD/CAD pair further and reached above 1.322 level.
Daily Technical Levels
Pivot point: 1.3192
The USD/CAD has completed a 61.8% Fibonacci retracement at 1.3228 level, and now it's heading further higher until the 1.3240 level, which is extended by 50 periods EMA resistance. On the higher side, the USD/CAD can go further higher until the next resistance level of 1.3270 upon the breakout of 1.3240 level. The RSI and MACD are in support of buying, but it will be better to wait for a 50 EMA bullish crossover before placing any bets in the USD/CAD pair. Good luck!