USD/CAD refreshes 27-month lows on USD sell-off
The USD/CAD pair pushed lower in the first half of the NA session and refreshed its lowest level since June 2015 at 1.2138 amid a heavy selling pressure witnessed on the greenback. As of writing, the pair was consolidating its losses at 1.2165, losing 0.5% on the day.
The sharp fall of the US Dollar Index seems to be caused by the strong upsurge of the EUR/USD pair. Following the monetary policy decision, the ECB President Mario Draghi delivered his remarks at the press conference, saying that the Governing Council was looking to make a decision on the asset purchase program in October. Although Draghi added that the bank was concerned over the volatility of the exchange rate of the euro, the greenback recorded heavy losses against the shared currency, pushing the DXY to its lowest level in more than 32 months at 91.38. At the moment, the index was at 91.60, losing 0.67% on the day.
Moreover, today's data from the U.S. further increased the pressure on the buck. According to the US Department of Labor, weekly initial claims jumped to its highest level since April 2015 at 298K while unit labor costs in the nonfarm business sector increased by 0.2% in the second quarter of 2017, missing the market estimate of 0.3%.
- US: Weekly initial claims was 298,000, an increase of 62,000 from previous week
- US: Productivity rises 1.5% in 2nd quarter 2017 (annual rate); unit labor costs rise 0.2%
On Friday, Canada will release its unemployment rate, which is expected remain steady at 6.3% in August. The economic calendar will also feature wholesale inventories and consumer credit change data from the U.S.
Technical outlook
The first technical support for the pair could be seen at 1.2120 (Jun. 18, 2015, low) ahead of 1.2080 (Apr. 27, 2015, low) and 1.2000 (psychological level). On the upside, resistances are located at 1.2240 (daily high), 1.2300 (psychological level) and 1.2400 (10-DMA). With today's drop, the RSI on the daily graph moved below the 30 mark, showing technically oversold conditions for the pair in the near-term.