USD/CAD Remains Under Pressure Below 1.3600; Risk Aversion Dominates The Market
The USD/CAD pair has managed to end the week on a positive note and even continued its 5 days of winning streak. But despite all of this, the USD/CAD didn't manage to close above the 1.3600 resistance.
The main reason for the stalling of the USD/CAD can be attributed to risk aversion which is affecting all the global equities. As a result of this, the funds are moving towards safe-haven assets, which explains why the USD/CAD is showing little action.
The only reason why the USD/CAD managed to remain bullish this week can be attributed to risk aversion. For now, the dominant theme is China and Evergrade, which filed for bankruptcy. This is an indication that the Chinese economy is not as strong as it used to be in the past.
US Labor Market Remains Robust
The data coming out of the USA was light, but it did show an uptick in retail sales as well as a strong labor market. This justifies the central bank's commitment to stay on course and not resort towards stalling the rate hikes or moving to rate cuts.
On the other hand, the data coming out of Canada was the July Producer Prices which increased by 0.4%. Just a month ago, the reading was -0.6%, mainly due to lumber and oil prices. Similarly, 3.5% of the raw materials were also seen during July.
The technical outlook of the USD/CAD reveals that the increase in oil prices happened a little late which is the main reason why USD/CAD is negative over the long term.
Looking ahead, the USD/CAD trend is positive for the short term as it also crossed the 200 SMA located near 1.3451. However, let's not forget that the pair has failed to cross the 1.3567 resistance, which presents some risks for the USD bulls.
Based on the economic data from last week, it becomes clear that the next week will be important for the USD/CAD as the pair tries to find its next trend.