- USD / CAD remained under some selling pressure for the fourth consecutive session on Friday.
- With Powell’s accommodating comments, the bullish market mood continued to weigh on the greenback.
- A slight pullback in oil prices could undermine the loonie and help limit any further losses.
The heavily offered tone around the greenback pushed the USD / CAD pair further below the 1.3100 mark, to the lowest level since January.
The pair extended this week’s retracement slide from the 1.3240 supply area and saw follow-up selling for the fourth straight session on Friday. The fall was caused exclusively by the dominant selling trend of the US dollar and did not appear to be affected by the decline in oil prices, which tends to undermine the commodity-linked loonie.
The greenback failed to capitalize on the previous day’s intraday rally and was put under pressure by dovish comments from Fed Chairman Jerome Powell on Thursday. During his keynote address at the Jackson Hole Symposium, Powell announced a change to an average inflation target and said the Fed would let inflation exceed its current target of 2%.
In addition to the change in inflation, Powell signaled that the Fed will seek to ensure that employment is not below its maximum level. The remarks indicated that the Fed may hold rates lower for longer, which, in turn, was seen as a key factor that continued to weigh on the USD during the first half of trading action on Friday. .
This, combined with the bullish mood in the market, further undermined the greenback’s relative safe-haven status and contributed to the continued fall of the USD / CAD pair. Meanwhile, a slight pullback in oil prices, against a background of profit taking, could help limit further losses, at least for now.
Market participants are now eagerly awaiting the release of the monthly Canadian GDP report, which, along with a wealth of second-tier US economic data, could produce near-term business opportunities. The US Economic Register features the release of the Core PCE Price Index, Chicago PMI, and Revised Michigan Consumer Sentiment Index.