USD/CAD remains pressured towards 1.2500 near two-week low, US Q2 GDP, oil moves eyed
- USD/CAD bears take a breather following the heaviest fall in a week.
- Firmer WTI oil prices extend post Fed weakness, US stimulus news also favor bears.
- Canada CPI, covid woes fail to disappoint sellers ahead of US Q2 GDP.
USD/CAD stays depressed around 1.2525, down 0.07% on a day, amid Thursday’s Asian session. The Loonie pair dropped the most in a week the previous day after the US Federal Open Market Committee (FOMC) meeting. Also favoring the pair sellers is the oil prices strength and chatters over the procedural passage of the US infrastructure spending bill.
The Fed matched wide marked expectations of announcing no monetary policy change, despite mentioning, “continuing economic improvement,” during the July meeting. However, it’s Chairman Jerome Powell who weighed down the US dollar by saying, "Economy has made progress toward goals since setting the bar for taper in December and will continue to assess progress in coming meetings."
Elsewhere, prices of WTI oil refreshed two week top as downbeat US dollar and higher-than-expected depletion in the official inventories from the US Energy Information Administration (EIA) favored the Canadian dollar (CAD) due to Ottawa heavy reliance on energy export.
Also negative for the USD/CAD prices could be the latest headlines from Reuters confirming that the US Republican Party has enough votes to push President Joe Biden’s infrastructure spending plans in the Senate. The latest update said that the bill has 67 votes in favor to to begin a debate.
It’s worth mentioning that the previous day’s Canadian Consumer Price Index (CPI) figures for June mostly matched market consensus and offered no challenges to the Bank of Canada’s (BOC) hawkish view, which in turn were ignored ahead of the Fed.
Amid these plays, S&P 500 Futures struggle for clear direction and so do oil prices amid a quiet session with a light calendar in Asia.
Hence, today’s preliminary reading of US Q2 GDP, expected 8.6% annualized versus 6.4% prior, will be the key. Additionally, covid updates, oil price moves and stimulus news could also entertain USD/CAD traders.
Read: US Q2 GDP Preview: Economy to continue to expand at strong pace, eyes on FOMC
Technical analysis
21-DMA and an ascending support line from June 11 restrict immediate downside around 1.2520. However, USD/CAD bulls are less likely to enter until the quote stays below the 200-DMA level of 1.2600.