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USD/CAD retreats from monthly tops post US & Canada data

  • Current account deficit increases in Canada.
  • DXY doesn't react to data releases from the U.S.
  • WTI stays in daily range below $58 as investors await OPEC headlines. 

After touching the 1.29 handle for the first time in a month, the USD/CAD pair lost its traction and retraced a portion of its daily gains in the early NA session. As of writing, the pair was trading at 1.2880, up 0.12% on the day.

Trade deficit lifts the Canadian current account deficit higher

According to the data released by the Statistics Canada, current account deficit widened by $3.8 billion in the third quarter to $19.3 billion, as the deficit on international trade in goods rose $3.6 billion to $8.9 billion. However, the data came better than the market estimate of $19.5 billion, allowing the loonie to stay resilient against the greenback.

On the other hand, today's data from the U.S. showed that initial weekly jobless claims eased to 238K from 240K for the week ending November 24 while the core-PCE price index, the Fed's favorite inflation gauge, remained steady at 0.2% and 1.4% on a monthly and yearly basis respectively. Following the data releases, the US Dollar Index showed no reaction whatsoever and was last seen at 93.22, virtually unchanged on the day.

Meanwhile, as investors are eagerly waiting for the OPEC meeting's outcome, crude oil prices are struggling to set a short-term direction. The barrel of West Texas Intermediate is now trading at $57.65, up $0.35 on the day. If OPEC decides to extend the output cut deal to the end of 2018, crude oil prices could stage a relief rally and help the commodity-sensitive loonie continue to erase its losses against the buck.

Technical outlook

The immediate hurdle for the pair aligns at 1.2890 (200-DMA). A daily close above that level could open the door to 1.3000 (psychological level) and 1.3045 (Jun. 29 high). On the downside, supports could be seen at 1.2800 (psychological level), 1.2750 (20-DMA) and 1.2685 (50-DMA). The RSI indicator on the daily graph continues to stay near the 70 handle, suggesting that the pair is technically overbought.

 

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