US Dollar Continues To Gain Traction07 July, 2015 by Aayush Jindal in Fundamental Analysis, Market Analysis, Technical Analysis, USDCAD
- US Dollar remained the first choice of investors, as it traded higher intraday against most of its counterparts.
- US Services Purchasing Managers Index (PMI) released by Markit Economics came in at 54.8 in June 2015, unchanged from the last reading.
- Canadian Ivey PMI released by the Richard Ivey School of Business came in at 55.9 in June 2015, i.e. above the forecast but lower compared with the last reading of 62.3.
- USDCAD pair is trading higher and looks set for more gains in the near term.
US Services PMI
Earlier during the NY session, the US Services Purchasing Managers Index (PMI), which gauges business conditions in the services sector was released by Markit Economics. The market was not expecting any major change in the PMI in June 2015. The result was in line with the forecast, as US Services Purchasing Managers Index came in at 54.8, i.e. similar to the last reading. The market liked the outcome, as the greenback was lifted after the release.
However, there was a minor concern noted in the report published, as it highlighted the fact that there was a slowdown in both output growth and staff hiring across for the service sector at Q2 2015 end.
Commenting on the recent release, the Chief Economist at Markit, Chris Williamson, stated that the “The June PMI data round off a solid second quarter for the US economy, with GDP likely to have risen at an annualized 3% rate. However, it’s important to look at what’s happened over the course of the quarter, rather than looking at the quarter as a whole”.
USDCAD Technical Analysis
The US Dollar opened the week with a gap higher against the Canadian dollar this week. However, the USDCAD pair sellers managed to close the intraday and took it lower. The pair found support around an important triangle trend line.
There was a sharp reaction towards the upside after the test of the triangle. Buyers managed to clear the triangle resistance area and took the pair close to 1.2660. The pair might correct lower in the near term. In that situation, it might find support around the broken triangle resistance area, coinciding with the 50% Fib retracement level of the last wave from the 1.2560 low to 1.2660 high.