The USDCAD pair is currently in a range bound price action as both sides of pair lack decisive trigger to help make a breakout. The subdued demand for safe haven instruments and broad based weakness surrounding US Greenback cap the pair’s upward movement while elusive progress in NAFTA talks between Canada and USA limits the pair’s downside movement. Yesterday, the Canadian dollar ended the day slightly higher relative to its US counterpart. Trading volumes in Canadian dollar futures were flat yesterday, and remain in line with 30-day averages. Turning to NAFTA, yesterday’s talks in Washington ended without any significant progress.
Macro Data Outcome Could Serve as Trigger for Breakout from Range Bound Price Action
Canadian Foreign Minister Chrystia Freeland returns to Montreal today for a conference with female foreign ministers. While she is scheduled to return to the US next Monday, she will be speaking at a United Nations session. According to a Reuters report on the subject, Canadian officials are also looking for the US to withdraw the threat of tariffs targeting Canadian auto imports. As of writing this article, the USDCAD pair is trading near flat at 1.2911 up 0.05% on the day. While lack of progress in NAFTA talks is already weighing down the pair, US President Donald Trump’s comment that “Canada is not in a good trade position while there NAFTA talks drag on” further weighed down the Loonie. However Canadian Loonie is also supported by bullish Crude Oil price in global markets.
The weakness in the greenback is sending the commodity complex higher as observes consider improvements in global economic growth and with both sides facing bearish pressure while there is a lack of clear trigger to help either side make a breakout, the pair is expected to continue moving in a range bound fashion. Later today, we’ll see Canadian inflation data and US Markit composite and Service PMI which will serve as trigger for breakout as trading session comes to close for the week. Rising Canadian inflation has stoked rate hike expectations in turn helping the Loonie, today’s Canadian CPI & Core retail sales data outcome will give analysts a conclusive idea of what to expect in terms of rate hike decision by Canadian central bank. Expected support and resistance for the pair are at 1.2905, 1.2890, 1.2880 and 1.2925, 1.2945, 1.2965 respectively.
This article was originally posted on FX Empire
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