USD / CAD recovers from monthly lows despite dollar weakness

• The Loonie is among the worst performing in the market on Wednesday.
• USD / CAD now neutral for the day after hitting the lowest level since early September.

The pair USD / CAD it posted a new daily high at 1.3139 despite the US dollar falling across the board. Earlier on Wednesday during the European session, the pair bottomed at 1.3080, the lowest level since September 7.

The rebound came amid a drop in crude oil prices and after Canadian economic data. Also, some profit taking on some CAD crosses could have weighed on the loonie. The WTI barrel is down 3.50%, trading modestly above $ 40.00.

On Tuesday AUD / CAD bottomed at 0.9245, the lowest level since June and has recovered over a hundred pips, a similar pattern follows the NZD / CAD. Both the Australian dollar and the kiwi are very high against the US dollar on Wednesday.

Economic data from Canada showed a smaller than expected increase in retail sales in August and the CPI index rose to 0.5% (year-over-year) in September. “Our current forecast has a general CPI that will grow only 1.2% in 2020. This context of benign inflation is in line with the expectations of the Bank of Canada and should leave those responsible for monetary policy free to keep interest rates at levels. exceptionally low for the foreseeable future ”, explained the analysts. at RBC Economics.

At time of writing, the USD / CAD is trading at 1.3115 / 20, around the same level that it closed on Tuesday. The rejection below 1.3100 could suggest some consolidation going forward, with the potential for a rally to 1.3200, if it breaks the immediate resistance at 1.3150. A close below 1.3100 would expose the next strong support seen at 1.3030.

Technical levels