- USD/CAD started the day soft before a pivot in the US session.
- Canada absent from the economic calendar on Tuesday.
- US Durable Goods declined more than expected, US PCE in the pipe.
The USD/CAD dropped to an intraday low of 1.3484 but bounced back above the 1.3500 level following a larger-than-anticipated decline in US Durable Goods Orders. The pair is currently stuck in short-term congestion as traders brace for the release of the US Personal Consumption Expenditure Price Index (PCE) data on inflation later this week.
Canada’s economic calendar remains relatively quiet until Wednesday, when Q4’s Current Account data is scheduled for release. However, the spotlight will likely be on the simultaneous publication of the US Gross Domestic Product (GDP) report at 13:30 GMT on Wednesday, overshadowing the Canadian data.
Daily digest market movers: USD/CAD pivots on Durable Goods miss
In January, US Durable Goods Orders took a hit with a 6.1% decline, missing the forecast of -4.5% and showing a downturn from the previous month’s revised -0.3% (initially reported as 0.0%). Additionally, the Conference Board Consumer Confidence Index disappointed by dropping to 106.7 compared to the expected 115.0, following the previous month’s 114.8. Meanwhile, the US Housing Price Index rose modestly in December, increasing by only 0.1% MoM, falling short of the 0.3% forecast and revising November’s figure down to 0.4%.
Looking ahead, Canada anticipates a recovery in its Q4 Current Account, expected to improve but still remain in negative territory at -1.25 billion, compared to the previous -3.22 billion. On the same day, the US annualized Q4 GDP is forecasted to hold steady at 3.3%. Moving to Thursday, Canada’s Q4 GDP is eagerly awaited, with market expectations anticipating a rebound in the yearly figure to 0.8% from the previous -1.1%.
Technical analysis: USD/CAD continues to chug near 1.3500
On Tuesday, USD/CAD experienced a dip, touching 1.3484 before staging a recovery back to the familiar 1.3520 level. The pair is currently hovering around the 1.3500 handle, with the 200-hour Simple Moving Average (SMA) serving as a crucial obstacle to momentum in the short term.
For bullish prospects, breaking through the immediate technical barrier of February’s high at 1.3586 is essential, setting the stage to challenge the 1.3600 handle. Despite a rising pattern of higher lows on the daily candles offering technical support for immediate bullish momentum, the price action faces resistance within a substantial supply zone ranging from 1.3500 to 1.3550.
