The USDCAD pair last week closed on dovish note with Canadian Loonie retaining the upper hand. Risk appetite in the broad market and weak US Dollar helped Canadian dollar gain across the latter half of last week. However, US Dollar rebound from weekly lows on upbeat US NFP & ISM manufacturing PMI data. Further dollar bulls managed to retain the rebound momentum from Friday’s end of session as the Asian market saw thin trading activity owing to holiday in China and Singapore two major global markets. However, price action still remained near 3-month lows hit early last week. But the pair managed to regain hold above 1.31 handle by mid-European market hours.
Crude Oil Price Action Helped Limit USD’s Gains
Further upside move was limited as Crude oil price rebound in the global market and Brent futures hit 3-month highs climbing above $60 handle. While the price of crude oil declined from intra-day high, the positive price action of crude oil in the broad market helped underpin demand for Loonie in the broad market. Loonie being commodity-linked currency saw gains whenever crude oil gained positive price action in the broad market. As of writing this article, USDCAD pair is trading at 1.3128 up by 0.23% on the day. The pair is trading positive ahead of US market hours but range bound action is likely to continue across rest of today’s market hours as both sides of the pair have equal strength which suggests a breakout action is unlikely today.
On the release front, there is no major release in the Canadian calendar while US calendar sees the release of Factory orders data. Similar to Brent futures, WTI futures also hit multi-month high as price temporarily scaled $55 handle. The hike in crude oil price is the result of an unexpectedly high impact of US sanctions on Venezuelan crude oil which hit global supply despite forecast hinting that demand was slow amid economic slowdown and OPEC production cut as U.S. productions could offset any disruption. This provides some level of fundamental support for crude oil preventing sharp upside move of USD. The pair needs to breach mid 1.31 handle for bulls to regain control of price rally while a fall below 1.30 handle will give CAD control over immediate price action.
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This article was originally posted on FX Empire
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