USD/CAD retreats further from its highest level since January
The USD/CAD pair comes under heavy selling pressure on the first day of a new week and retreats further from its highest level since January 6 touched on Friday. The pair maintains its offered tone, around the 1.3565-1.3560 region through the early North American session and reacts little to the mixed US macro data. The US Census Bureau reported that headline Durable Goods Orders fell by 4.5% in January, down sharply from the previous month's downwardly revised reading that showed a strong 5.1% growth. The disappointment, however, is offset by orders excluding transportation items, which rose 0.7% during the reported month as compared to a modest 0.1% uptick anticipated and fails to provide any impetus.
That said, a recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - continues to weigh on the safe-haven Greenback. This, in turn, is seen as a key factor exerting pressure on the USD/CAD pair, though a combination of factors should help limit deeper losses and warrants some caution before positioning for any further decline. Crude Oil prices meet with a fresh supply amid worries that rapidly rising borrowing costs will dampen economic growth and dent fuel demand. This could undermine the commodity-linked Loonie. Apart from this, expectations that the Federal Reserve will stick to its hawkish stance in the wake of stubbornly high inflation support prospects for the emergence of some USD dip-buying. Even from a technical perspective, the USD/CAD pair last week confirmed a breakout through the 100-day Simple Moving Average (SMA), which favors bullish traders. Furthermore, speculations that the Bank of Canada (BoC) will pause the policy-tightening cycle make it prudent to wait for strong follow-through selling to confirm that spot prices have topped out in the near term.