USDCAD continues higher for the third consecutive session as the risk appetite fades away amid rising fears of a second coronavirus infection wave. The Canadian dollar also pressured by weaker oil prices which are under pressure for the second consecutive session.
Fitch Downgrades Canada
Fitch rating agency has downgraded Canada’s Long-Term foreign currency issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’. The outlook for Canada is Stable. The downgrade reflects deteriorating public finances due to the coronavirus crisis. Fitch’s expects that Canada’s general government debt/GDP will stabilize over the medium term and that the Canadian economy will gradually recover, supported by the emergency monetary and fiscal policies. The rating agency expects Canada’s general government deficit to widen to 16.1% of GDP in 2020, then narrow to 6.5% and 3.0% of GDP in 2021 and 2022, respectively.
U.S. Durable Goods Orders Beat Expectations
The economic data from the USA came better than expected. The Durable Goods Orders registered in at 15.8% above the estimates of 10.9% in May, excluding the Transportation Durable goods came in at 4% above the expectations of 2.5%.
The Jobless claims totalled 1.48 million the previous week as unemployment remains high amid the coronavirus lockdown. The forecasts were for 1.35 million jobless claims. The claims remained above 1 million for the 14th straight week. The Continuing Jobless Claims came in at 19.52 million below the expectations of 19.96 million on June 12.
The third reading for the first quarter GDP came at -5% in line with expectations. The Core Personal Consumption Expenditures for the first quarter came in at 1.7% topping the expectations of 1.6%.
The USDCAD is 0.05% higher at 1.3638 as the pair continue higher for the third consecutive trading session after the pair tested three days ago the 200-day moving average which has proved a strong support zone in June. The technical outlook remains bearish for the long term, but a rebound above the 100-day moving average might cancel that bearish momentum.
On the upside, the first obstacle for USDCAD stands at 1.3666 the daily high. If USDCAD breaks higher, the next hurdle will be met at 1.3693 the high from June 15. The next resistance stands at 1.3789 the 100-day moving average.
On the other side, the initial support for USDCAD stands at 1.3607 the daily low. If the pair breaks below 1.3607, the next support will be met at 1.3525 the low from yesterday’s trading session. The next target for USDCAD bears is at 1.3485 the 200-day moving average.