Thursday, January 26, 2023

USD/CAD marks fresh daily low below 1.3400 following data from US and Canada

  • Canada: Inflation continues to decline in December.
  • US: The Empire Manufacturing Index unexpectedly fell in December.
  • USD/CAD remains sideways, unable to hold above 1.3400.

usd/cad It broke below 1.3400 after the release of US and Canadian manufacturing data. It posted a new daily low at 1.3383. As the loonie continues to outperform and the US dollar declines overall, it remains near lower levels with a bearish bias.

Data weighs on USD/CAD

The US Empire Manufacturing Index unexpectedly fell to its lowest level since May 2020. The index fell from -11.2 to -32.9, against expectations of -4.5 for a recovery. The report showed bearishness in the indicator prices. The USD fell after the report.

Inflation data in Canada came in below expectations. The consumer price index fell 0.6% in December and the annual rate declined to 6.3% from 6.8%. The Bank of Canada’s Prince’s Core Index fell 0.3% and the annual rate fell to 5.4% from 5.8%, versus the 6.1% market consensus.

“Broadly speaking, it probably won’t make much difference to the Bank of Canada. Yesterday’s business outlook survey suggested that the tightening effect is starting to take effect, but today’s data, with Q4 activity data stronger-than-expected strengthen the perception that the economy is in excess demand. BOC is prudent in raising 25 basis points next week. After last year, BOC cannot afford to fall behind the curve again. We see 4.50 as the terminal rate % continue to seek,” said analysts at TD Valorous Burstiles.

sideways, within a downtrend

Last week, USD/CAD’s rebound from the monthly low was limited by the 1.3450 area. During the current week, the pair is showing difficulties to stay above 1.3400. Recent price developments confirm that downside risks remain strong.

On the other side, initial support emerges at 1.3345 and then attention turns to the January low at 1.3320.

technical level

Nation World News Desk
Nation World News Deskhttps://nationworldnews.com
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