The USDCAD pair has maintained a consolidative price action across the week’s trading session so far trapped inside a narrow price band below mid 1.32 handle but stable above 1.3200 mark indicating that USD remains strong in short term and outlook remains positive for US Greenback in near future. The commodity linked currency Canadian Loonie which is backed by crude oil is trading highly bearish in broad market owing to continued decline in crude oil price action affected by global investors concerns of slow economic growth and subdued demand which has resulted in situation of over supplied crude oil market despite sanctions imposed on OPEC’s second largest crude exporter Iran. As of writing this article, USDCAD pair is trading at 1.3227 down by 0.10% on the day.
A Hawkish US Retail Sales Data Could Serve As Breakout Trigger
While US Greenback has turned dovish in broad market since yesterday’s trading session owing to fall in US Treasury yields and major global currencies are trading positive, a lack of decisive trigger to help make a breakout has resulted in the pair trading range bound across the week. Risk sentiment is high today following optimism surrounding Sino-U.S trade talks on report of China submitting a written response to US trade demands helped global equities and major currencies gain upper hand over an already subdued US Greenback but the news has failed to provide any sort of positive influence to Canadian Loonie. So far the intraday chart has gone fully sideway, and the USD/CAD remains largely unchanged from where it was over twenty-four hours ago.
On release front, Canada releases ADP nonfarm employment change, while the U.S. will publish retail sales, the Philly Fed Manufacturing Index and crude oil inventories data. Canada’s ADP isn’t expected to provide much impact on price action, however US retail sales data has a hawkish forecast and an outcome that is in line with or better than expected could turn out to be a much awaited breakout trigger that could help USD gain strength across broad market and also move higher against Canadian Loonie breaking current standstill scenario. With the USD/CAD entangled in near-term consolidation, traders should wait for a break-and-retest of key levels before picking a direction. The pair needs to make a break above 1.3260-65 handle and move up considerable to confirm a bullish trend.
This article was originally posted on FX Empire
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