US PMI continued the trend today and missed estimates showing signs that the rate hike cycle is being felt. Canadian retail sales provided mixed signals with USDCAD eyeing Jackson Hole for its next move. Retracement incoming or consolidation ahead?
The Jackson Hole Symposium will now be key to market moves for the rest of the week as Central Bankers take the podium. Comments could have a knock-on effect on overall sentient while in the case of USDCAD the speech by Fed Chair Jerome Powell will hold added significance.
Durable goods orders is another high impact event on the calendar tomorrow and could stoke volatility around its release and will defintely be worth keeping an eye on as well.USDCADhas rallied with conviction from recent lows to post 5 successive weeks of gains and eyeing a 6th. USDCAD has a tendency to trend for quite some time before reversing but usually puts in significant moves when it does.
The downside faces many hurdles with immediate support at the 1.3500 handle with the 200-day MA resting just 45 pips lower at 1.3455. Should USDCAD have the legs to take these initial levels of support out then attention may turn to the 100 and 50-day MAs resting at 1.3387 and 1.3294 levels respectively.
Looking at the alternative and if this is a temporary pause, a continuation of the upside rally faces resistance at 1.3650 and then the long-term descending trendline around 1.3700 becomes the focus for USDCAD bulls and may prove a difficult nut to crack. A lot to consider and no doubt and interesting few days and weeks ahead for USDCAD heading toward the September Central Bank meetings.
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