USD/CAD digs in for a Thursday rebound from 1.3200

• USD/CAD bounced back from multi-month lows near 1.3200.
• CAD getting dragged down by a pullback in Crude Oil.
• Broad-market risk appetite sours after surprise bump in Treasury yields.

The USD/CAD climbed back over the 1.3200 handle on Thursday, pulling back from recent declines but still on pace to close in the red for a third straight week. The US Dollar (USD) is poised to close down against the Canadian Dollar (CAD) for seven of the last nine consecutive trading weeks.

Risk bids were extended by misses in US economic data early Thursday, with US Initial Jobless Claims and Pending Home Sales both missing the mark.

US Initial Jobless Claims missed expectations, printing at 218K for the week ended December 22 versus the forecast 210K, vaulting over the previous week’s print of 206K (revised slightly higher from 205K). US Pending Home Sales in November also missed the mark, printing at a flat 0.0% versus the forecast 1.0% rebound from October’s -1.2% print (revised upwards from -1.5%).

Crude Oil decline drags CAD lower

Data misses from the US initially sparked a risk appetite run as softening economic indicators from the US increases the odds of pushing the Fed into a rate-cutting cycle sooner rather than later. 

However, a misfire in a US 7-year Treasury auction is watering down risk appetite ahead of the Thursday closing bell. US 7-year Treasury yields rose from 3.837% to 3.859% on Thursday in a $40 billion bond auction, sparking a reversal of the week’s risk appetite flows.

Crude Oil fell on Thursday as broad-market risk appetite retreated back into the US Dollar, dragging the Loonie lower and setting the stage for a late-week rebound in the USD/CAD as 2023’s trading gets set to wrap up on Friday.

USD/CAD Technical Outlook

A late topside break for the Greenback pulled the USD/CAD back into fresh highs on Thursday after several weeks of consistent declines, rebounding from the 1.3200 handle to retest the 1.3240 region.

The pair continues to trade closely with the 50-hour Simple Moving Average amidst steady bearish intraday chart action, with near-term bids capped off by the 200-hour SMA descending through the 1.3300 handle.

The USD/CAD is down nearly 5% from the November swing high into 1.3900, and the 50-day SMA is accelerating into the downside, set for a bearish cross of the 200-day SMA.

USD/CAD Hourly Chart

USD/CAD Daily Chart

USD/CAD Technical Levels