USD/CAD jumps to nearly three-week high, around mid-1.3500s post-Canadian GDP

The USD/CAD pair reverses an intraday slide to the 1.3400 neighbourhood and climbs to a nearly three-week high during the early North American session  |  29/11/2022 13:48
  • USD/CAD attracts fresh buying near the 1.3400 mark and jumps to a nearly three-week high.
  • A goodish recovery in the US bond yields and a softer risk tone help revive the USD demand.
  • The mixed Canadian GDP report weighs on the Loonie and further provides a lift to the major.

The USD/CAD pair reverses an intraday slide to the 1.3400 neighbourhood and climbs to a nearly three-week high during the early North American session. The buying interest picks up pace following the release of the monthly Canadian GDP print and lifts spot prices to the 1.3545-1.3550 region in the last hour.

Statistics Canada reported that the domestic economy expanded a nominal 0.1% in September and by 0.7% during the third quarter, beating estimates for a reading of 0.4%. This, however, was largely offset by a lower-than-anticipated annualized growth rate of 2.9% during the July-September period. The mixed data, along with a modest pullback in Crude Oil prices, weighs on the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair.

The US Dollar, on the other hand, trims a part of its intraday losses, which is seen as another factor lending support to the USD/CAD pair. The initial optimism led by hopes that the Chinese government will scale back its strict anti-COVID restrictions fades rather quickly amid worries about a deeper global economic downturn. Apart from this, a goodish intraday bounce in the US Treasury bond yields helps revive demand for the safe-haven buck.

The overnight hawkish remarks by influential Federal Open Market Committee (FOMC) members seem to act as a tailwind for the US bond yields and the USD. In fact, St. Louis Fed President James Bullard, New York Fed President John Williams and Fed Vice Chair Lael Brainard stated that more rate hikes were warranted and there was a long way to go to fight inflation. Furthermore, technical buying above the 1.3500 psychological mark provides an additional boost to the USD/CAD pair.

Next on tap is the release of the Conference Board's US Consumer Confidence Index. This, along with the US bond yields and the broader risk sentiment, will drive the USD demand. Apart from this, traders will take cues from Oil price dynamics to grab short-term opportunities around the USD/CAD pair.

Technical levels to watch

 

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