USD/CAD traded mostly sideways today after a sharp drop on Wednesday following an expected rate hike from the Bank of Canada. The currency pair reached a high of 1.2771 today but fell under pressure in the North American session to give back early day gains.
USD/CAD dropped over 200 points on Wednesday after the BoC delivered its first rate hike in seven years. The pair has found some support at 1.2720 after briefly dipping below the 1.2700 handle yesterday.
The turn lower in the North American session was on the back of a recovery in oil prices as they fell under pressure yesterday following the weekly EIA oil inventories report. WTI crude oil prices (USOIL) turned higher today after finding support around the $45.00 price point to erase most of yesterday’s loss.
The US dollar index (DXY) trades flat on the day after closing relatively unchanged yesterday. The index declined in the early day but found support from the June low which resulted in a bounce higher to wipe losses.
On the economic calendar, Producer Price Index figures out of the United States were reported to rise 0.1% in June, ahead of the analyst consensus for an unchanged month. Weekly unemployment claims were reported at 247,000, slightly above the consensus of 245,000 and against a revised 250,000 claims in the prior week.
The highlight for Friday will be CPI and retail sales number released out of the US at 08:30 EST. Analysts are looking for a rise of 0.1% in CPI for June following a drop of 0.1% in the prior month. Retail sales are also expected to recover as analyst expect a gain of 0.1% in June after a decline of 0.3% in May.
USD/CAD is held up by a confluence of support from a horizontal level and two declining trend channels that date back to a high posted on June 8th and June 21st. A failure to hold above the current area of support could cause an accelerated move to the downside with the next major level of interest falling at 1.2538.