The USDCAD pair is trading in favor of US Greenback in European market hours but the pair fell from its intra-day high yesterday on a sharp bearish dive post hawkish rhetoric from the BOC’s governor Poloz, speech while presenting the Bank’s latest MPR before the House of Commons Finance Committee, albeit repeating what was said in the last presser. This is important factor supporting Canadian Loonie as the central bank has opted to take positive stance amidst ongoing trade wars and geo-political issues and bearish pressure from crude oil price action in global markets. As of writing this article, the pair is trading at 1.3129 up by 0.14% on the day as US Greenback erased losses from yesterday’s nose dive over increase in demand supported by broad based strength in USD. This along with risk averse trading activity in forex markets despite increased risk appetite in equity markets weighed on Loonie’s gains.
Investors Await Macro Data Updates For Directional Cues
But when looking at the performance of US greenback and Canadian Loonie over the last two trading session, we can say that Canadian Loonie has performed well against US greenback when compared to other major global currencies as commodity linked currency has managed to limit the upside move of US Greenback within a small price band and US Greenback failing to break above the range despite US dollar index hitting a 16-month high. US spot Crude oil WTIUSD has turned positive after three consecutive sessions of trading in red which also added support to Canadian Loonie helping the currency limit US Greenback’s upside move. Investors now await macro data updates scheduled to release on both sides of pair during North American market hours. US calendar will see release of ADP Non-Farm Employment data, Chicago PMI & Crude Oil inventory data while Canadian calendar is scheduled to release GDP & RMPI data. Forecasts for Canadian macro data are neutral while US calendar has slightly dovish forecasts.
A worse than expected US macro data could see Loonie try and gain upper hand against Greenback once more. When looking from technical perspective, the pair continues to trade locked inside a short range from 1.3100 to 1.3148, forming a symmetrical triangle on the 1-hourly chart just below six-week tops set last Friday. Given that the pair has held above important intraday moving averages – 100 & 200-hour SMAs, the triangle could be categorized as a continuation pattern. Moreover, technical indicators on the mentioned chart are yet to gather negative momentum and further add credence to the bullish set-up/positive outlook. However, a convincing break through the triangle support, currently near the 1.3100 handle, will invalidate the outlook and prompt some aggressive long-unwinding trade.