Yahoo Finance USD/CAD Daily Price Forecast – Canadian Macro Data To Provide Directional Cues For Near Term Action
USDCAD began its upward price action yesterday as crude oil price started declining post dovish Chinese GDP data. Despite holiday thin trading session overnight, broad-based sell-off in risk assets gave dollar strength to breach 1.33 handle during Pacific- Asian market hours. But the pair was unable to sustain a rally above 1.33 handle as market lacked trading volume owing to Martin Luther King Jr. day celebrations in US markets. However, news hit the market that IMF has revised its 2019 growth forecast and update hinted at a slowdown in economic growth and activities in all major markets citing ongoing trade-war between U.S. & China and political turmoil in major European nations as the reason. This news inspired a fresh and strong wave of risk-averse trading activity in global markets just as sell-off from weak Chinese GDP update was easing away in the market.
Crude Oil Price Decline Helped US Dollar Sustain Rally Above 1.33 Handle
Global growth worries caused risk asset sell-off in both forex and equity markets which boosted US dollar in the broad market. This helped the pair breach 1.33 handle once again and hit 2-week high of 1.33428 earlier in the day. However, US dollar continues to suffer dovish influence in the broad market owing to partial US government shutdown which has extended into 5th consecutive week and dovish fed stance on 2019 rate hike plans. While sharp upside move in favor of US Greenback was prevented and the pair fell down from intra-day highs, declining crude oil price pressured Canadian Loonie helping the pair maintain a solid foothold over 1.33 handle. The slowdown in global economic activity would mean less demand for crude oil which caused oil price to decline. Loonie being a commodity-linked currency takes a dovish turn whenever crude oil market suffers.
As of writing this article, USDCAD pair is trading at 1.3325 up by 0.26% on the day. Moving forward, investors are focused on macro data update from US and Canada for short term trading opportunities. US calendar will see the release of existing home sales data while the Canadian market will see the release of manufacturing and wholesale sales data. A better than expected reading in Canada’s macro data updates will help Loonie regain the upper hand and drag the price action back to 1.32 handle while a worse than expected reading will help the pair aim for intra-day highs once again. When looking from a technical perspective, the pair is likely to make bullish breakout if it manages to breach critical resistance level at 1.3345 handle. However, a fall below 1.3300 handle will result in the resumption of price rally favoring Canadian Loonie.
This article was originally posted on FX Empire
