The USD/CAD pair continued gaining positive traction for the second consecutive session on Monday, albeit stalled the up-move near the 1.3200 handle. Against the backdrop of Friday’s stronger NFP report, which was seen as one of the key factors behind the pair goodish rebound from the 1.3100 neighborhood, escalating global trade tensions kept pushing the pair higher at the start of a new trading week. However, continued upside move remains out of hands as USD lacks momentum to break through resistance at 1.32 handle due to prevalent bullish tone around crude oil prices in global market which supports commodity linked currency Loonie. Aside from NFP update, better than expected wage data also supported US Greenback as wage data resulted in US Treasury yields spiking on last Friday’s NA market session. As of writing this article, USDCAD is trading at 1.3185 up 0.14% on the day.
Crude Oil Price Action to Remain Main Driving Force Today as Both Sides of Pair Have Silent Macro Calendar
Meanwhile investors are focusing on NAFTA talks and America has been pushing Canada to open up discussions related to its closed diary industry if a fair deal is to be made. Canada has encouraged overproduction and flooded export markets for milk proteins used in cheese and yogurt, hurting U.S. dairy farmers. “Our farmers don’t have access to the Canadian markets the way that they have access to us. Class 7 has to go. It can’t be renamed something or called something else”, said U.S. Agriculture Secretary Sonny Perdue referring to a new milk class created last year by Canada to price milk ingredients such as protein concentrates, skim milk and whole milk powder. Canada’s closed, $16 billion dairy market is among the last sticking points in talks between U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland, which broke up on Friday without a deal.
Today’s US/Canadian economic docket lacks any major market-moving economic releases and hence, the USD/oil price dynamics might continue to act as key determinants of the pair’s momentum ahead of Atlanta Fed President Raphael Bostic’s scheduled speech later in the day. On a sustained move beyond the 1.3200 handle, leading to a subsequent breakthrough 1.3225 supply zone now seems to pave the way for an extension of the bullish trajectory towards 1.3275-80 intermediate resistance en-route the 1.3300 round figure mark. Alternatively, weakness back below the 1.3150-40 immediate support might prompt some additional long-unwinding trade and drag the pair back towards 50-day SMA support near the 1.3090 region.
This article was originally posted on FX Empire
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