Yahoo Finance USD/CAD Daily Price Forecast – Declining Oil Price Weighs Down Loonie
The USD/CAD pair lacked any firm directional bias and was seen oscillating in a narrow trading band below through the early European session as trading session opened for the week. The pair continued with its struggle to build on the momentum further beyond the 1.3400 handle and is now weighed down by a modest follow-through US Dollar retracement from 1-1/2 year tops. Despite Friday’s better than expected US monthly retail sales data, dovish outcome in US PMI and industrial/manufacturing data combined with uncertainty over the Fed’s rate hike path in 2019 kept the USD bulls on the defensive and turned out to be some of the key factors exerting some downward pressure on the first day of a new trading week.
USD bulls held on the defensive amid uncertainty over the Fed’s policy outlook
Slumping investor confidence in risk assets as traders fear a growing global economic slowdown and fragile oil prices sees the Canadian dollar stuck at a low point against the greenback; the US Dollar has closed higher against the Loonie for eight of the last eleven straight trading weeks, closing flat for two and only losing moderate ground for a single week. As the Canadian dollar shares its fate with oil prices, shell-shocked energies markets are weakening the CAD as oil prices remain constrained at recent lows ahead of this week’s key event risk – the latest FOMC monetary policy update. With a 25bps rate hike largely priced in the market, the near-term USD trajectory will be guided by the Fed’s forward guidance and eventually help investors determine the pair’s next leg of a directional move. As of writing this article, USD/CAD pair is trading flat at 1.3377 down by 0.06% on the day.
Moving forward, he USD price dynamics might continue to act as an exclusive driver of the pair’s momentum amid absent relevant market moving economic releases, either from the US or Canada. On Canadian Calendar, the next major economic release for the week is Bank of Canada’s (BOC) Consumer Price Index which will drop around the same time when US FOMC rate decision statement is released on Wednesday. When looking from technical perspective, on a sustained move beyond the 1.3400 handle, the pair is likely to aim towards retesting 18-month tops, around the 1.3445 region. On the flip side, the 1.3355-50 region might continue to protect the immediate downside, which if broken might prompt some additional long-unwinding trade and drag the pair further towards challenging the 1.3300 round figure mark.
This article was originally posted on FX Empire
