The USDCAD pair yesterday closed positive on declining crude oil price. US Dollar bulls managed to make a sharp upside move as back to back crude oil inventory data from the U.S. hinted at increasing stockpile which caused CAD to lose ground. This helped the pair establish rally above 1.32 handle as the trading session came to close for the day and continue trading positive in Asian market hours setting the course for the fifth consecutive session of positive price action. As both API & EIA reports hinted at increasing stockpile data crude oil price slumped and Canadian Loonie being commodity-linked currency suffered as result.
Crude Oil Rebound Seals US Dollar’s Rally
Risk-averse trading activity in the broad market and renewed tensions surrounding Sino-U.S. trade talks also weighed down currency pair as trading session resumed in most major Asian markets following holiday celebrations. Weak crude oil price helped USDCAD pair move as high as mid-1.35 handle but crude oil price managed to rebound in mid-European market hours as focus turned back to the impact of U.S. sanctions on Venezuelan crude oil on global glut scenario and effect of supply disruption in global crude oil market on the whole. The change in investors focus was inspired by reports which stated that Saudi Arabia had pumped less crude oil than was agreed on during December OPEC meeting. Following a spike in crude oil price, Loonie gained some level of strength in the broad market and capped US Greenback’s gain near mid-1.35 handle where the pair is now experiencing consolidative price action.
As of writing, this article USDCAD pair is trading at 1.3251 handle up by 0.53% on the day. On the release front, both calendars lack first tier macro data updates and the Canadian calendar is silent for the day while the US calendar will see release of initial jobless claims data. However the same is unlikely to have any impact on price action which suggests range bound action is likely to continue for rest of today’s market hours. Moving forward, the pair needs to breach strong resistance near 1.3270/75 handle for US dollar to see stable upward price action while a fall below 1.3200 handle is required for Canadian Dollar to regain control over price action.
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This article was originally posted on FX Empire
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