USD/CAD rises above 1.22 on greenback recovery
The USD/CAD gained traction during the second half of the NA session and rose above the 1.22 handle to refresh its daily high at 1.2210. As of writing, the pair was trading a couple of pips below that level, gaining 0.35% on the day.
The pair's recent modest upsurge seems to be fueled by the US Dollar Index's rebound in the last hours and crude oil's struggle to retrace its losses.
After today's data from the U.S. missed the market estimates, the DXY dropped to 91.60 with the initial sell-off. Following a 0.2% contraction in retail sales in the U.S., industrial production recorded its sharpest decline in nearly eight years. However, as further details of the report showed that Hurricane Harvey impacted the data negatively, suggesting that it was a temporary effect, the greenback sound some interest from the market. As of writing, the index was at 91.82, up 0.24% on the day.
In the meantime, the barrel of West Texas Intermediate failed to hold above the critical $50 mark on Friday and started to erase its gains. Although this drop is seen nothing more than a technical correction, it made it difficult for the commodity-linked loonie to stay resilient against the USD.
Technical outlook
The RSI indicator on the H4 chart turned north above the 50 mark, signaling a buildup in the bullish momentum. However, the pair is unlikely to extend its gains in a significant way as the trading volume thins out towards the end of the week. 1.2240 (Sep. 14 high) could be seen as the initial resistance ahead of 1.2300 (psychological level) and 1.2330 (20-DMA). On the downside, supports could be encountered at 1.2120 (daily low), 1.2080 (Apr. 27, 2015, low) and 1.2000 (psychological level).
Today's data from the U.S.:
- US: Retail sales for Aug 2017 were $474.8 bln, a decrease of 0.2% from July
- US: Industrial production declined 0.9% in Aug following six consecutive monthly gains
- US: Consumer confidence edged downward in early September - UoM
- US: Manufacturers’ and trade inventories were at $1,873.9 bln, up 0.2% from June