The USD/CAD moved lower, breaking down on Thursday amidst broader dollar weakness. Weaker than expected U.S. GDP weighed on short-term U.S. yields, which generated headwinds for the greenback. U.S. pending home sales were also softer than expected. Lastly, U.S. Jobless claims rose more than anticipated, which helped the Loonie gain traction.
The USD/CAD tumbled on Thursday and is poised to test support near the 100-day moving average at 1.2365. Resistance on the currency pair is seen near the 10-day moving average at 1.2580. The exchange rate is oversold. The current reading on the fast stochastic is 4, well below the oversold trigger level of 20, which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line.
Jobless Claims Rise More than Expected
According to the Labor Department, jobless claims eased to 400,000 for the week ended July 24. That level is nearly double the pre-pandemic norm and was above the 380,000 estimates. However, it was a decrease from the previous week’s 424,000. Continuing claims edged higher to 3.27 million. According to the National Association of Realtors, pending home sales fell 1.9% in June. The pending home indicator is a measure of contracts signed which is a future gauge of existing home sales. High existing home sale prices continue to generate a choppy sales market. GDP accelerated 6.5% on an annualized basis, less than the 8.4% expected by economists.