USD/CAD rebounds strongly and recovers 1.3500 after US data and improving debt ceiling talks

  • Good US jobs data reports bullish support for the dollar, suggesting that a possible pause in the Federal Reserve’s tightening cycle is less likely.
  • Progress in US debt ceiling negotiations fuels positive sentiment, with a deal expected later in the week to avoid a possible default.
  • Canadian real estate data disappoints as the New Home Price Index contracts in April, adding to downward pressures on the CAD.

He USD/CAD rises strongly and recovers the level of 1.3500 after touching a daily low of 1.3442. US political issues relating to the debt ceiling had taken center stage, and developments on the issue sparked optimistic sentiment. In addition, a strong US jobs report could discourage the Federal Reserve (Fed) from pausing its tightening cycle. At the time of writing, the USD/CAD pair is trading at 1.3516.

Strong US data and positive sentiment support USD/CAD, overcoming headwinds from the Canadian housing market.

Fundamental news from the United States bolstered appetite for the dollar. A good US jobs report highlighted the tightness of the labor market, with initial claims for jobless benefits rising below estimates. Meanwhile, Philadelphia Fed manufacturing output for May was negative, although it did show some improvement amid various headwinds such as sticky inflation and higher interest rates. Given the background, it could deter Fed officials from taking a pause due to labor market tightness.

Meanwhile, US stocks received offers such as negotiations on an increase in the US debt ceiling. Recent remarks by House Speaker Kevin McCarthy underscored the urgency of reaching a deal this week and for Congress to vote next week before the US default expires.

Lately, US Senate Majority Leader Schumer has commented that the debt limit talks are moving forward. Lael Brainard, Biden’s economic adviser, said the biggest risk for Congress is not being able to avoid a default.

On the Canadian front, housing data pointed to further deterioration. April’s New Home Price Index slumped -0.1%m/m, below the previous month’s report, and on a yearly basis it fell -0.2%, below March’s 0.2% advance.

On the central bank front, Fed officials were very hawkish, with Dallas Fed President Lorie Logan saying current data does not support removing rate hikes at the next meeting. , adding that the Fed has not made the necessary progress on inflation.

Bank of Canada Governor Tiff Macklem and Lieutenant Governor Rogers said financial institutions should adjust to higher rates. Macklem added that April’s CPI data was stronger than expected and that economic data will guide the June rate decision.

USD/CAD Technical level

USD/CAD

Overview
Last price today 1.3514
Today I change daily 0.0059
today’s daily variation 0.44
today’s daily opening 1.3455
Trends
daily SMA20 1.3512
daily SMA50 1.3554
daily SMA100 1.3511
daily SMA200 1,347
levels
previous daily high 1.3536
previous daily low 1.3437
Previous Weekly High 1.3565
previous weekly low 1.3315
Previous Monthly High 1.3668
Previous monthly minimum 1.3301
Fibonacci daily 38.2 1.3475
Fibonacci 61.8% daily 1.3498
Daily Pivot Point S1 1.3416
Daily Pivot Point S2 1.3377
Daily Pivot Point S3 1.3317
Daily Pivot Point R1 1.3515
Daily Pivot Point R2 1.3575
Daily Pivot Point R3 1.3614

Source: Fx Street

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