The USD/CAD pair opened dovish for the week with gap down move and has since maintained a range bound price action near intra-day lows. Canadian Loonie gained upper hand today on increased risk appetite and broad based US Dollar’s weakness. Wall street equities got a boost last Friday on better than expected US NFP data and comments from US Fed Chair Jerome Powell where he stated that Federal reserve could pause rate hike plans for 2019 depending on macro data outcome which boosted investors risk appetite. Asian market hours saw major indices trade positive on lingering cues from China’s Central bank policy adjustment which also provided some fundamental support to increased risk appetite in market which helped Canadian Loonie gain some ground against US Greenback.
Recovery in oil prices underpins Loonie
Canadian Loonie also gained support from rebound in crude oil price in both futures and equity market. Loonie being a commodity linked currency (Crude Oil) is greatly affected by any changes to price action of said commodity. Crude Oil price is recovering in broad market supported by OPEC’s planned production cuts and investor’s hopes for positive progress in Sino-U.S trade talk which begins today. Declining crude oil price is beginning to affect US energy markets as well owing to increased production and inventory stockpile in US which has caused investors to speculate if US would change its stance on output and inventory management approach. China being the biggest imported of crude oil could set off a bullish rally if the two-day talks which began today has positive outcome.
As of writing this article, the USD/CAD pair is trading at 1.3349 down by 0.16% on the day and has displayed consolidative action across both Asian and European market hours having near mid 1.33 region having hit 3-week lows earlier today. On release front, both US & Canada have first tier macro data with IVEY PMI & ISM Manufacturing PMI scheduled to release in american market hours which will keep the pair highly volatile for rest of today’s market hours. When looking from technical perspective, the pair is expected to retain bearish price action in immediate and near future with further decline testing 1.3300 level to downside while a recovery faces resistance around 1.3400 handle respectively.
This article was originally posted on FX Empire
More From FXEMPIRE:
- E-mini S&P 500 Index (ES) Futures Technical Analysis – January 7, 2019 Forecast
- Natural Gas Price Forecast – natural gas markets sideways on Monday
- Silver Price Forecast – Silver markets roll over
- US/Sino Trade Talks Resume, EU Markets Remain Cautious, Futures Indicate A Flat Open For US Indices
- Gold Price Futures (GC) Technical Analysis – January 7, 2019 Forecast
- EUR/USD Price Forecast – Euro rallies significantly