USD/CAD clings to mild gains above 1.3200 as US Dollar, WTI pare recent moves with mixed feelings

• USD/CAD bounces off the lowest levels in nine months but recovery moves lack upside momentum.
• Mixed sentiment, lack of conviction about Fed vs. BoC divergence trouble Loonie pair traders.
• Mid-tier statistics from US, Canada eyed for clear directions, next week’s Fed Chair Jerome Powell’s testimony is the key.

USD/CAD prints minor gains at the lowest level since September 2022, marked the previous day, amid sluggish markets on early Friday. In doing so, the Loonie pair licks its wounds near 1.3225 after falling the most in two weeks the previous day.

Apart from the dicey markets, the quote’s latest inaction could also be linked to the mixed concerns about the Bank of Canada (BoC) and the US Federal Reserve (Fed).

While the BoC surprised markets with a rate hike in the last week, the Canadian job numbers disappointed the policy hawks afterward.

On the other hand, the Fed’s hawkish halt couldn’t gain more accolades as the latest US data appear mixed. That said, US Retail Sales growth marked an increase of 0.3% for May versus -0.1% expected and 0.4% previous readings while the Core readings, mean Retail Sales ex Autos, match 0.1% market forecasts for the said month, compared to 0.4% prior. Meanwhile, NY Fed Empire State Manufacturing Index jumps to 6.6 in June versus -15.1 expected and -31.8 prior whereas Philadelphia Fed Manufacturing Index drops to -13.7 for the said month from -10.4 prior and compared to -14 market forecasts. On the same line, US Industrial Production for May cools down to -0.2% against 0.1% estimated and 0.5% prior while Initial Jobless Claims reprints the upwardly revised figures of 262K for the week ended on June 09 versus 249K expected.

Elsewhere, mixed concerns about China and a light calendar, after witnessing the Bank of Japan (BoJ) decision, prod the WTI crude oil price recovery.

Against this backdrop, US Dollar Index (DXY) grinds near 102.20-30 while struggling to pare the biggest daily loss in three months whereas the WTI crude oil grinds near a one-week high, mildly offered near $70.70 by the press time.

Looking ahead, Canada Wholesale Sales for April, the preliminary readings of the US Michigan Consumer Sentiment Index (CSI) and five-year inflation expectations for June will be important to watch for clear directions. However, major attention will be given to the next week’s Testimony of Fed Chair Jerome Powell, especially after the latest failure to convince haws.

Technical analysis

With the oversold RSI conditions, the USD/CAD may witness a corrective bounce toward February’s bottom of around 1.3265. However, the buyers are less likely to retake control unless witnessing a daily close beyond the previous monthly low surrounding 1.3315.

Meanwhile, tops marked in July and September 2022, around 1.3220-05 zone, appear a tough nut to crack for the Loonie pair sellers.