The USDCAD pair opened on a positive note yesterday and traded positive for the majority of the trading session. However, as US Treasury Yield hit lowest since 2017 during American market hours, the US lost its upward momentum and fell sharply. This helped loonie gain positive momentum despite soft crude oil price and close on a dovish note. The pair continues to trade near overnight lows but price action is range bound in Asian session as both sides see equal strength for both bulls and bears. While US T.Yields tanked in American market hours, it rebounded in Asian market hours. Meanwhile, increased risk appetite in the market and easing concerns of global economic slowdown helped underpin CAD bulls.
US Crude Oil Stockpile Data To Serve As Directional Trigger
As trading session moved into European market hours, crude oil began to gain strength enough to influence CAD bulls in the broad market. Price of US crude oil moved above $59 per barrel in the global market. The steady upside price action of crude oil was supported by positive influence from OPEC enforced production and supply cut and US sanctions on Iranian & Venezuelan crude oil. Further, reports which suggested Russia will meet its reduction target agreed in OPEC summit by end of this month added strength to crude oil pushing it back on the path to reaching new 2019 highs. Canadian Loonie is a commodity-linked currency and solid positive price action in crude oil helped Loonie maintain its hold near overnight lows. Also, the strength of crude oil helped Loonie maintain control over price action of the USDCAD pair.
Given the fact that Canadian macro calendar is silent for the day, investors await updates from US macro calendar for directional cues and short term profit opportunity. The US calendar sees the release of CB consumer confidence, Building Permits, Housing starts & API weekly crude oil stockpile data. Despite the rebound in US T.Yields the curve inversion and recent speech from FOMC members has resulted in investors fearing a recession in the US. This limits prospects of gain for USD, while Loonie remains strong in the global market. A dovish US macro data may result in further downside move, but the key update to look out for is weekly crude oil stockpile data as it could affect the price of crude oil in the broad market giving USD bulls control over price action once again.
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