The USDCAD pair yesterday saw rangebound price action with bearish bias yesterday on positive price action in the crude oil market. The pair even fell below mid 1.33 handle during American market hours as the trading session came to close for the day owing to a spike in crude oil price action. Further, better than expected Canadian IVEY PMI helped the pair maintain rangebound price action near intra-day lows across American market hours. However, the lack of further headlines pertaining to Sino-U.S. trade talks aside from the usual started weighing down investor sentiment. This resulted in Loonie losing its edge and control of the rally against the US dollar resulting in steady upward price action across the day.
Weak Crude Oil Price Underpins USD Bulls
However, news of US President Donald Trump’s comment came in as saving grace. Trump commented that the two nation’s presidential summit will occur within the next four week and trade deal will be signed between two nations. While the pair saw steady upward price action, renewed risk appetite supported by optimism surrounding trade talks capped US Greenback’s positive price rally. But positive fundamental support for US dollar from upbeat US Treasury Yields helped the pair maintain rangebound price action in the global market. Crude oil – the commodity which is linked to Canadian Dollar saw subdued price action post scaling new 2019 highs in the previous session. Mixed cues from the global market were the reason for the decline in crude oil price action.
Dovish cues from Crude oil capped Canadian Dollar’s momentum despite the prevalent risk on investor sentiment supporting positive price action of the US Dollar in the global market. Investors now await macro data updates for short term profit opportunities and directional cues. Canadian Calendar will see the release of first tier Employment change and second tier unemployment rate updates while the US calendar will see the release of first tier Unemployment rate and Non-Farm Payroll data updates and second tier Average hourly earnings index data updates. When looking from a technical perspective, the pair lacks directional bias having found resistance to the upside. Based on the macro data outcome, positive Canadian and US macro data will lead to continued rangebound price action. A negative Canadian macro data will favor moving towards 1.34 handle while negative US macro data will result in the pair moving towards previous session lows as the trading session comes to close for the week.
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