The US Dollar managed to preserve its firm footing across international currency markets during Thursday's trading session. The USD/CAD currency pair hovered around 1.4240, recording a modest daily increase of 0.07%. Robust economic reports from the United States, coupled with consistently elevated bond yields, provided essential support for the greenback, while Canada's economic indicators delivered limited backing for its domestic currency.
Resilient US Manufacturing Data and Mounting Cost Pressures
Manufacturing activity in the United States continued to demonstrate strength despite losing a bit of momentum. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) edged down slightly to 54.5 in September compared to 54.6 in the preceding month, falling just short of market projections of 55.
Despite the slight headline decline, internal elements within the survey revealed notable vitality. The New Orders Index climbed to 55.3, while the Employment Index advanced to 52.7. Concurrently, inflation pressures across production channels accelerated sharply, evidenced by the Prices Paid Index leaping from 71.1 in August to 77.9 in September. This spike underlines persistent cost pressures across industrial supply chains.
Record Treasury Yields and Ongoing Geopolitical Developments
In the fixed income space, benchmark bond yields hovered at levels unseen in decades. The 10-year US Treasury yield stood near 5.32% on Thursday after touching an intraday peak of 5.34%, marking its highest level since 2002. Such sustained returns on sovereign debt continue to attract capital into the greenback.
At the same time, market participants maintained close observation over global diplomatic friction. Talks between Washington and Tehran remain stalled, adding to geopolitical uncertainty. US President Donald Trump stated in an interview with Time Magazine that an escalation of bombing against Iran after the midterm elections remained a possibility. These tensions have reinforced the US Dollar's appeal as a defensive asset.
Canadian Economic Indicators and Technical Chart Structure
Domestic momentum in Canada provided minimal buoyancy for the Loonie against its southern neighbor's currency. The S&P Global Canada Manufacturing PMI moderated to 51.5 in September from 53 in August. While a number exceeding 50 indicates ongoing business expansion, the pace of deceleration capped any meaningful recovery for the Canadian Dollar.
Looking at the one-hour technical chart, USD/CAD traded around 1.4242 with a distinct constructive bullish tone. The price action held comfortably above both its 100-period simple moving average (SMA) at 1.4189 and its 200-period SMA at 1.4136. A dense layer of horizontal price floors rests immediately underneath, led by 1.4232 and 1.4200. The 14-period Relative Strength Index (RSI) stood near 57, reflecting healthy positive momentum without entering overbought conditions.
To the upside, an immediate horizontal barrier at 1.4260 caps further advances in the short term. On the downside, prompt support lies at 1.4232, followed closely by 1.4200 and 1.4175. Deeper bids are positioned near 1.4150 and the 200-period SMA at 1.4136. Below those boundaries, 1.4133 and 1.4100 serve as safety nets ahead of broader support levels located at 1.4025, 1.3974, and 1.3945.
Global Currency Pairs and Asset Markets Under Dollar Strength
Broad dollar strength created ripple effects across alternative assets and global foreign exchange pairs. The AUD/USD pair consolidated near a two-month trough around the mid-0.6900s during Thursday's Asian session. US PCE inflation data reduced expectations for an October interest rate hike, yet persistent oil-driven price worries kept debt yields high. Australia's trade surplus narrowed significantly in August to AUD495M, which produced modest impact on the pair.
Concurrently, USD/JPY held near the top of its weekly band above 158.00 in Asian hours. Broad dollar strength outweighed expectations of a hawkish Bank of Japan and intervention risks from Japanese officials. In commodities, spot gold struggled against higher yields and the greenback, with XAU/USD trading near $4,167, up 0.26% on the day.
Digital asset markets reflected similar caution. Bitcoin fluctuated between support at $82,500 and overhead resistance at $85,000. Ethereum traded under pressure below $2,700, with $2,600 acting as initial support, while Ripple dropped beneath the $1.50 threshold. Overall sentiment regarding the Federal Reserve shifted markedly, transitioning from expectations of an October rate increase just one week ago toward a widely anticipated policy pause following softer inflation readings and cautious central bank remarks.
