USD/CAD rebounds further from monthly lows to the 1.2350 zone

• US dollar strengthens versus commodity currencies as stocks and crude oil slide.
• USD/CAD extends gains during the American session, upside still seen as corrective.

The USD/CAD is rising on Thursday after posting on Wednesday the lowest daily close since early July. The pair bottomed at 1.2288 on Asian hours and then bounced to the upside. During the American session it printed a fresh daily high at 1.2353 and then pulled back to 1.2345.

The main trend in USD/CAD continues to point to the downside and the current move higher could be seen as corrective. The pair needs a daily close under 1.2300 to suggest bears are still in control.

The US dollar is holding onto daily gains across the board, except versus the Japanese yen. The DXY is up by 0.03%, ending a six-day negative streak. Higher US yields and a deterioration in market sentiment helped the greenback. The USD/CAD also finds support from a correction in crude oil prices. The WTI barrel is pulling back from multi-year highs, and trades under $81.00.

US economic data showed a decline in Initial Jobless Claims to the lowest since March 2020 below 300K. On the negative front, the Philly Fed retreated from 30.7 to 23.8 (consensus: 25). Existing Home Sales rebounded more than expected by 7% in September. Home prices rose 0.4% in September in Canada.

On Friday, preliminary Markit PMI is due in the US and in Canada the August retail sales report with preliminary numbers for September.

Technical levels