During the early Friday morning session in Asia, the Loonie consolidated the strongest daily bullish move in over a week around 1.2680. A strong US dollar and weak oil prices offered dual support to the latest run-up.
The US Dollar Index showed the biggest daily gains in a month the previous day, after the US Retail Sales for August and the Philadelphia Fed Manufacturing Index for September revived Fed tapering concerns.
The US Retail Sales MoM jumped to the highest in five months while crossing expectations of -0.8% with +0.7% figures. Further, the Philly Fed gauge also rose strongly to 30.7 versus 19 forecast and 19.4 prior, marking the strongest figures in three months.
Likewise contributing to the US dollar’s Strength is the market’s rush for risk-averse assets amongst the US-UK-Australia security pact and the US hosting of the UK, India, Australia, and Japan for diplomatic talks the next week. These moves are speculated as against China and will weigh in on the market sentiment.
Back to Canada, Housing Start for August, Wholesale Sales for July, and ADP Employment Change for August all three came in softer and strengthened the USD/CAD prices.
Adding to the pair’s strength is the weakness in the oil prices, mainly due to the US dollar’s inverse relations with the commodities as well as easing fears of the hurricane. Canada’s main export item rose initially on Thursday on the threat to energy production in the Gulf of Mexico from Hurricane Nicholas before reversing returns later.
Although the worries of the Fed’s tapering announcement during the next week’s Federal Open Market Committee supports USDCAD bulls, today’s preliminary readings of the US Michigan Consumer Sentiment Index for September, expected 72.2 versus 70.3 prior, may suggest intermediate directions to the pair traders.
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