The USDCAD pair has been trading positive since the trading session started for the week. While risk appetite remains high in the global market on Sino-U.S. trade optimism and major global currencies trade positive, the Canadian Dollar wasn’t able to establish a favorable price action. Despite, crude oil price trading positive yesterday and Sino-U.S. trade talk related headlines providing solid fundamentals and US Dollar losing ground in American session last night, political tensions in Canada seem to weigh down Canadian Loonie in the broad market. Further, there also seems to be some lingering influence of disappointing GDP update which hit the market last Friday.
Political Tensions & Lingering GDP Update Impact Keep CAD In Bears Grip
Following the resignation second cabinet member owing to allegations against Canadian Prime Minister Justin Trudeau, the Loonie lost all fundamental support it gained from positive crude oil price. This helped USD cross above 1.33 handle last night hitting two week tops despite the US Greenback losing ground in the global market owing to dovish wall street activity and a decline in US long term T.Yield from recent highs. While crude oil traded positive in spot market today, political tensions remain high in Canada leading to price action in favor of USD today. Weak CAD aided performance of USD bulls resulting in pair scaling new two weeks high today as well hitting 1.3352 handle in early European market hours. As of writing this article, USDCAD pair is trading at 1.3341 up by 0.26% on the day.
Moving forward, investors are focused on macro data updates for short term profit opportunities. Fundamentals favor a positive price action for USD in the immediate and near future which combined with weak CAD suggests macro data outcome today is unlikely to have any impact that could affect directional bias of overall price action. On the release front, the Canadian calendar will see the release of IVEY PMI while the US calendar will see the release of New home sales data, ISM Non-Manufacturing PMI and Markit Composite/service PMI in early American market hours. When looking from a technical perspective, bulls show solid hold over price action given the fact that the pair has managed to breach 1.33 handle and establish a stable rally over the same. Expected support and resistance for the pair are at 1.3300, 1.3275/70 and 1.3375, 1.3400 handles respectively.
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