Canadian dollar rebounds against 'technically overbought' greenback
Canadian dollar gains 0.6% against the greenback
Touches its weakest intraday level since March 2020
Price of oil falls 0.8%
10-year yield climbs to 3-week high at 3.340%
By Fergal Smith
TORONTO, Dec 19 (Reuters) -The Canadian dollar rallied against its high-flying U.S. counterpart on Thursday as investors took stock of technical conditions for the currency pair and ahead of domestic data that could show retail sales increasing in October.
The loonie CAD= was trading 0.6% higher at 1.4365 to the U.S. dollar, or 69.61 U.S. cents, after earlier touching its weakest level since March 2020 at 1.4467.
The U.S. dollar became more technically overbought overnight against the Canadian currency than it has been in over two years, said Michael Goshko, senior market analyst at Convera Canada.
The relative strength index for the currency pair touched 80.8 on Wednesday, its highest level since September 2022. A reading above 70 signals an overbought condition.
"I wouldn't be surprised to see traders take profit around year-end as they square up and close their books on the year," Goshko said.
Wall Street's main indexes also regained some ground a day after the Federal Reserve's projections of fewer-than-expected interest rate cuts and higher inflation next year wrong-footed some investors and pummeled U.S. stocks.
Still, the price of oil CLc1 fell 0.8% to $70.02 a barrel as investors worried that a slower pace of Fed easing could dampen economic growth. Oil is one of Canada's major exports.
Economists forecast that Canadian retail sales rose 0.7% in October. The data, due on Friday, could add to recent evidence of some parts of the domestic economy picking up after the Bank of Canada lowered interest rates.
Canadian Prime Minister Justin Trudeau has the full support of his cabinet of ministers to continue in that role, new Finance Minister Dominic LeBlanc said.
Canadian bond yields moved higher across a steeper curve. The 10-year CA10YT=RR was up 10.5 basis points at 3.330%%, after earlier touching its highest level since Nov. 25 at 3.340%.
Reporting by Fergal Smith
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