The USDCAD pair is currently trading at 1.3019 with 0.12% increase in value as Canadian Loonie managed to hold back US Dollar’s momentum until late hours of Asian market session on Thursday. This was because of mixed market reaction post yesterday’s FOMC update and proceedings on Sino-U.S Trade wars. Public opinion of Fed rate decision was neutral however a part of traders and investors were disappointed with outcome as the release didn’t provide anything new beyond endorsements of stronger growth and household spending. Adding further complications to market sentiment was confirmation of Trump proposing raising tariffs to 25% from 10% on goods imported from China which hit market around same time the FOMC statement was released which resulted in investors mulling over how to proceed with future bets as analysts feel that US economy could still be affected over retaliatory tariff imposed by China as US goods account for 3% of entire goods Imported by China every year.
NAFTA Talks & Sino-U.S. Trade Woes Weigh Down Both Sides Of the Pair
NAFTA proceedings is another news that investors of Canadian Loonie focus on, and as per latest news updates the US and Mexico are making progress on the autos section of NAFTA, while leaving Canada out. The worry is that they gang up on Canada somehow and leave Ottawa with a worse deal. Oil is also part of the equation as it slips. In any case, the bulk of the market appears to be slowly coming to the conclusion that a deal is getting closer which resulted in pair hitting intra-day low of 1.29745 and closing on Wednesday at 1.29819, the first time 1.30 handle was breached since 14-June-18. Looking at hourly chart gives the opinion that the pair seems to have neutral tone in Asian market hours today, however global market is on alert as Sino-US trade war woes reach new heights post US conforming increase in tariff for Chinese goods worth over 200 billion.
Loonie’s gain in early Asian and late North-American market hours was also supported by uptrend movement in Crude oil price, however a decline in Crude oil price action in mid-Asian market hours plus increasing demand for US Greenback as a safe haven currency in face of trade war and a central bank that provides strong support and positive outlook to country’s economy in face of trade war served as factors that weighed down Canadian dollar resulting is US Greenback regaining strong support over 1.30 handle. Macro calendar has no major releases scheduled for Loonie during next 48 hours and volatility for the pair is expected to come from USD traders as investors await NFP data scheduled to release tomorrow before placing new medium-long term bets. Looking at price action from technical perspective, the bullish divergence of the relative strength index (RSI), as seen in the hourly chart, indicates scope for a corrective rally toward the 200-hour MA of 1.3077, while (50-hour, 100-hour and 200-hour) moving averages have shed bearish bias supportive of growth in US Greenback’s favor. Expected support and resistance for the pair are at 1.3000, 1.2975, 1.2951 and 1.3055, 1.3078, 1.3113 respectively.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Gold Rebounds Post Testing Near 2018 Lows but Dovish Market Sentiment Remains Prevalent in Market
- GBP/USD Daily Price Forecast – GBP/USD Trades Flat Ahead of BOE Rate Decision
- Price of Gold Fundamental Daily Forecast – Price Action Suggests Fed News Was Fully-Priced into Market
- E-mini Dow Jones Industrial Average (YM) Futures Analysis – August 2, 2018 Forecast
- Forex Daily Outlook – August 2, 2018
- Crude Oil Price Update – In Position to Cross to Bearish Side of Major Retracement Zone