The US Dollar continued its decline against the Canadian Dollar for second trading session as crude oil price action saw solid gains for second trading session. Spot US crude has been trading positive since trading session started for New Year and is up nearly 8% as of today while Canadian crude oil price is also recovering in broad market. This boost in crude oil price is providing fundamental support to commodity linked currency Loonie which combined with US Greenback’s weakness in broad market helped Loonie reach 4 week lows. The rebound in crude oil price action in broad market is backed by OPEC’s production and supply cuts and optimism surrounding Sino-U.S trade talks as China is biggest importer of crude oil and positive outcome would lead in trade talks will lead to improvement in demand for crude oil resulting in bullish crude oil price market.
Investors Eye BOC MPC Update & US Crude Inventory Data For Clue of Near Term Outlook
Meanwhile US dollar rebounded from 2½ month lows hit in previous session as sentiment surrounding US Greenback improved on pickup in the US Treasury bond yields. The bearish pressure on US greenback eased further in European market hours today on increased investor expectations for positive outcome in Sino-U.S trade talks. Dollar suffered bearish influence from Fed Chair Jerome Powell’s comments about Fed’s readiness to pause rate hike plans for 2019 based on macro data outcome during his speech last Friday and it still has lingering influence on market which is another factor helping Loonie remain near 4-week lows hit earlier today. However slight rebound in US Greenback’s demand in broad market helped USD recover from intra-day lows. As of writing this article, the USD/CAD pair is trading flat at 1.3290 down by 0.03% on the day.
On release front today, Investors focus remains on Canadian and US trade balance scheduled to release later today with US markets also set to see release of first tier data JOLTs Job opening data. But main focus of investors remain on Bank of Canada’s Monetary Policy Update scheduled to release tomorrow and US crude oil inventory data which is expected to boost CAD bulls as forecasts hint at draw in stock pile information. When looking from technical perspective, daily chart hints at strong bearish grip on market as the pair is on decline for fifth consecutive session today extending last week’s bearish slide from 19-month tops as Dollar bulls lack strong break out trigger. Moving forward 1.3240/50 range acts as immediate support below which decline could continue to 1.3200 handle while 1.3300 handle acts as immediate resistance post which pair could rebound to 1.3260 price level.
This article was originally posted on FX Empire
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