USD/CAD seesaws near 1.2350 despite heavy oil, US/Canada data in focus

• USD/CAD pauses two-day downtrend, retreats from intraday high of late.
• Risk-off mood help USD to consolidate recent losses, weigh on commodities.
• US Core PCE Inflation, Canada GDP will decorate calendar.
• Stimulus update, Fed tapering concerns are the key risk catalysts.

USD/CAD remains indecisive around 1.2350 amid the initial European session on Friday. In doing so, the Loonie pair sellers take a breather amid mixed clues concerning oil, the US and Canada.

Starting with the Canadian highlights, the Bank of Canada’s (BOC) end of bond issuance portrays optimism of the Canadian economy but the monthly GDP reading for August, expected +0.70% versus -0.10% prior, becomes necessary for the USD/CAD to please the bears.

On the same line, oil prices have been cheering hopes of economic recovery and supply outages before the US dollar rebound and the chatters surrounding tapering challenged the energy bulls.

Elsewhere, the absence of a deal on US President Joe Biden’s $1.75 trillion stimulus and mixed concerns over China’s Evergrande and real-estate market, not to forget fears of Fed tapering, weigh on the market sentiment and underpin the US dollar’s safe-haven demand. That said, the greenback gauge dropped the most in a week as US Q3 GDP and the European Central Bank (ECB) triggered risk-on mood.

Amid these plays, stock futures are down around 0.40% whereas the US 10-year Treasury yields gain four basis points (bps) to help the US Dollar Index (DXY) consolidate the recent losses.

Looking forward, the US Core Personal Consumption Expenditures (PCE) – Price Index for September, expected to ease to 0.2% from 0.3% prior, may help USD/CAD sellers should the Canadian GDP matches the upbeat forecast of +0.7% versus -0.10% MoM in August.

Technical analysis

USD/CAD prints a bearish flag on the four-hour chart, highlighting a downside break of 1.2300 as a trigger for further selling. However, MACD teases bulls and hence a corrective pullback towards 100-SMA level near 1.2410 can’t be ruled out before the next fall.