The USD/CAD currency pair on Friday failed to make any major movement despite a disappointing US manufacturing data. The currency pair continues to trade in a consolidative pattern formation just below the 1.3000 level after bottoming at around 1.2951 late last year.
The pair has now climbed to trade within the medium point of the normal trading zone in the RSI indicator. However, it remains several pips below the current level fo the 100-hour and the 200-hour SMA lines in the 60-min chart.
USD/CAd Fundamentals Overview
From a fundamental perspective, the USD/CAD currency pair is trading at the back of mixed and relatively quiet sessions in both the US and the Canadian markets. This comes following the Christmas day and the New Year celebrations where just breadcrumbs of data trickled into the financial markets.
On Friday, the greenback fell against several currencies after the ISM Manufacturing PMI for December fell to 47.2 down from 48.1 in the previous month. It missed the consensus estimate of 49. ISM Prices Paid for the same month beat the expectation of 47.5 with 51.7 while Construction Spending for November beat the (MoM) expectation of 0.3% with 0.6% change.
On Thursday, the US and Canadian Markit Manufacturing PMIs for December missed the expectations of 52.5 and 51.9 respectively with 52.4 and 50.4. The US initial jobless claims impressed with 222k claims versus a projection of 225k claims while the continuing claims were a bit higher than expected with 1.728M versus 1.719M.
USD/CAd Technical Analysis (the 60-min Chart)
Technically, the USD/CAD currency pair appears to be lacking the fundamental backing to trigger a rebound. From the perspective of the Canadian Dollar, there is also not enough momentum to extend the gains against the US Dollar and this has limited further downward movement.
Therefore, the bulls will be targeting short-term profits at around 1.3009 or higher at 1.3042. On the other hand, the bears will be looking to pounce for profits at around 1.2968 or lower at 1.2951.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAd currency pair appears to be trading in a slightly descending wedge coming off an ascending channel. This indicates a significant reversal in the market sentiment with the bears seemingly seizing control from the bulls.
Therefore, the bears will be targeting long-term profits at around 1.2873 or lower at 1.2750 going into next week. On the other hand, the bulls will hope for a major rebound towards 1.3132, 1.3315, or higher at 1.3441.