USD/CAD edges higher past 1.3200 as Oil price retreats from 14-week top, Fed inflation, Canada GDP eyed

• USD/CAD clings to mild gains despite positing inaction during four-day winning streak near weekly high.
• US Dollar steadies after stellar run-up as markets await Core PCE Price Index for June.
• US data allowed DXY to print the biggest daily gains in four months, Oil cheered risk-on mood to refresh multi-day peak.
• Fed’s favorite inflation gauge may allow the US central bank to secure September rate hike and fuel Loonie pair.

USD/CAD remains sidelined near 1.3230, mildly bid during a four-day uptrend amid early Friday. In doing so, the Loonie pair defends the previous day’s run-up at the weekly top even as the market turns cautious ahead of the top-tier US data, as well as due to the mixed sentiment about the US-China ties. It’s worth noting that a pullback in the WTI crude oil prices from a multi-day high also prods the Loonie pair as Canada relies heavily on energy exports for earnings.

Market sentiment remains mildly positive of late and prods the US Dollar bulls by the press time despite fears of fresh US-China tension due to the White House's readiness to stop the Hong Kong Leader from attending November’s Asia-Pacific Economic Cooperation (APEC) leaders’ summit in San Francisco.

Even so, WTI crude oil retreats from the highest levels since April 19, down 0.20% intraday near $79.50 as the markets await Fed’s favorite inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index for June, expected 4.2% YoY versus 4.6% prior. It’s worth noting that the risk-on mood superseded the US Dollar’s rally to propel the Oil price the previous day.

On the other hand, US Dollar Index (DXY) posted the biggest daily jump since March 15 the previous day, not to forget mentioning a stellar rebound from the weekly low, as the US statistics recall the Fed hawks and bolstered the Treasury bond yields. It’s worth noting that the Wall Street benchmarks closed with nearly half a percent of daily losses whereas the benchmark US 10-year Treasury bond yields marked the biggest daily jump in a month to refresh a three-week high near 4.02%, close to 4.0% by the press time.

Talking about the US data, the preliminary readings of the US Gross Domestic Product (GDP) Annualized for the second quarter (Q2) improved to 2.4% from 2.0% prior, versus 1.8% market forecast. On the same line, the US Durable Goods Orders also jumps 4.7% for June compared to 1.0% expected and 1.8% expected (revised). Additionally, Initial Jobless Claims declines to 221K for the week ended on July 21 versus 235K prior and analysts’ estimations of 228K. It should be observed that the US Pending Home Sales for June also improved to 0.3% MoM versus -0.5% expected and -2.5% prior (revised). However, the first estimations of the US Q2 Core Personal Consumption Expenditure eases to 3.8% QoQ from 4.9% prior and 4.0% market forecasts whereas GDP Price Index edges lower to 2.6% from 4.1% previous readings and 3.0% expected.

Moving on, the US Core PCE Price Index for June will be crucial to watch for clear directions of the USD/CAD price. Also important will be the monthly Canada GDP for May, expected 0.3% MoM versus 0.03% prior.

Technical analysis

Daily closing beyond a one-week-old descending resistance line, now support around 1.3200, keeps the USD/CAD pair buyers hopeful.