The Census Bureau in the States just released its reading on the durable goods orders for September. According to the findings of the report, the overall orders grew by 1.9 per cent over the previous month.
The recorded performance surpassed the initial market expectations, which were projecting a much more moderate growth of just 0.5 per cent. The net durable goods orders thus surged nearly five times on a monthly basis.
The findings of today's report complimented the overwhelmingly positive retail sales data for the same period, which was released two weeks prior. The US economy is evidently faring quite well given the gloomy global prospects for growth.
Though not completely out of trouble yet, the relatively robust performance of the American economy could calm investors, who are scrambling for safe-havens as the elections draw nearer and the coronavirus pandemic continues to grow in scale.
These developments are also affecting the value of the dollar, which has stabilised itself against the loonie since our last overview of the USDCAD.
As can be seen on the 4H chart below, the reinvigorated greenback has been able to recuperate against the Canadian dollar, being driven by these positive fundamental developments.
The pair's price action is now firmly concentrated above the major support level at 1.31300, following a couple of failed breakdowns. If the price action attempts a third breakdown before rebounding yet again, this will result in the establishment of an Inverted Head and Shoulders pattern.
The latter is inherently bullish in nature, frequently signifying the establishment of new uptrends. Hence, it would confirm the likely emergence of one such trend towards the 1.34000 and above.
The Inverted Head and Shoulders pattern could, however, fail to unfold completely. As can be seen, the price action is currently finding strong support from the 20-day MA, which could prove to be a major turning point.
In other words, the USDCAD could be poised to start appreciating right away.