USD/CAD rebounded during the US session on the back of a stronger US dollar, lower crude oil prices and higher US yields. The pair climbed to 1.2944 and it was trading at 1.2935, still lower for the day but far from the low, it reached earlier at 1.2898. The area around 1.2900 capped the downside and rebounded. There is no question that the return of trade wars to headlines is a major concern to CAD bulls who are going to be growing increasingly concerned that the NAFTA outlook is going to be far less constructive moving forward now that Canada has reason to be increasingly dissatisfied with the US administrations seeming disregard for their longstanding relationship. Crude oil prices were lower on early Monday’s trading session as the WTI hit $64.80 a barrel, lowest since April 10. While in the bond market, the 10-year yields rose to 2.937%, the highest in a week. Mixed US macro data has very little impact on pair’s momentum.
The USD/CAD pair struggled for a firm directional bias and seesawed between tepid gains/minor losses through the early European session on Tuesday. The pair failed to build on overnight rebound from the 1.2900 handle, with a combination of factors leading to a range-bound price action within a narrow trading band below mid-1.2900s. A goodish rebound in crude oil prices, amid expectations of a decline in the US inventories, underpinned demand for the commodity-linked currency – Loonie and kept a lid on any meaningful up-move for the major.
It would now be interesting to see if the pair continues finding support near the 1.2900 handle or extends last week’s rejection slide from the key 1.30 psychological mark as traders now look forward to the release of US ISM non-manufacturing PMI for some fresh impetus. Investors are also on lookout for Markit Composite & Service PMI and JOLTS Job openings data. The Canadian market is expected to see Q1 Labor Productivity update but the impact of macro data on US Greenback is expected to be higher based on forecasts of macro data outcome. Expected support and resistance for the pair are at 1.2900 / 1.2870 / 1.2855 and 1.2950 / 1.2980 / 1.3000 respectively.
This article was originally posted on FX Empire
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