The USD/CAD pair extended overnight sharp retracement slide from two-week tops and dropped to the key 1.3000 psychological mark, albeit seems to have found some support. On Wednesday, sentiment around the Canadian Dollar deterioration on news that Saudi Arabia instructed overseas asset managers to sell-off their Canadian equity, bond and cash holdings. Following the headlines, the pair rallied hard and spiked beyond the 1.3100 handle, albeit the momentum quickly ran out of steam. The pair retreated around 115-pips from an intraday high level of 1.3120 and seemed largely unaffected by a steep decline in crude oil prices, which tends to dampen demand for the commodity-linked currency – Loonie.
CAD Lost Ground Over Saudi Arabia’s Instructions To Sell Off Canadian Equities
The pair kept losing ground through the Asian session but now seems to have found some support amid renewed US Dollar buying interest in later half of Asian market hours. This coupled with a follow-through weakness in oil prices helped the pair to rebound around 20-pips from session lows. It would now be interesting to see if the pair is able to build on the uptick or meets with some fresh supply at higher levels as traders now look forward to the economic data – Canadian New Housing Price Index (NHPI) and the US Producer Price Index (PPI), for some fresh impetus.
Then, we had NAFTA news in the mix with hopes that Canada possibly joining discussions as soon as next week helping to give the Loonie a lift. This helped to drive USD/CAD lower on the day as the greenback also retraced gains against major currencies but the key thing in USD/CAD is that the move saw sellers drive price below the two key hourly moving averages and that meant that near-term bias turned more bearish. Buyers attempted to get above the 100-hour and 200-hour moving averages again but failed on several attempts thereafter. And now, we’re seeing price move lower as a result.
The 1.3000 handle is the next line of defense for buyers before further support is then seen from the 31 July to 1 August lows between 1.2975-80 levels. Thereafter, the 100-day MA comes into play as the next line of defense for buyers. That currently sits at 1.2963. Despite all the Saudi Arabia talks that have been making the headlines this week, the most important factor affecting the Loonie remains NAFTA. Investors are now setting up short term positions in conjunction with key technical levels to define and limit risk as trading session moving forward is set to see a bout of volatility from US & Canada both today and tomorrow from US Inflation & Canadian employment data. Expected support and resistance for the pair moving forward are at 1.3000 / 1.2980 / 1.2961 and 1.3040 / 1.3075 / 1.3095 respectively.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Gold Trades Range-Bound in Asian Market Hours
- Oil Price Fundamental Daily Forecast – Traders Looking to Establish New Balance Points after China Tariffs
- Investing in Smart Cloud Mining: Benefits to Society and Private Capital Growth
- USD/CAD Daily Price Forecast – USD/CAD Holds Steady above 1.30 Handle Ahead of Housing Stats & Employment Data
- Commodities Daily Forecast – August 9, 2018
- U.S. Dollar: Trade War Rhetoric, Strong Economy Aiding the Currency