The USDCAD pair is currently trading in range bound pattern as investors caution has capped major moves in either direction. The pair yesterday saw a sharp downside move during American market hours influenced by FOMC Monetary Policy Committee update. The Fed’s decided to keep interest rate unchanged, however, they changed forward guidance from delayed rate hike plans to patient wait and watch approach. The FOMC statement revealed that the Fed Committee would like to observe economic activity and is even ready to reduce interest rates instead of hiking it depending on economic activity. This inspired a sharp sell-off surrounding US Dollar and this was further aggravated by comments from Fed Chair Powell during his post-FOMC conference speech.
Sino-U.S. Trade Talk Related Headlines To Provide Directional Bias
Fed Chair Powell mentioned that the Fed is likely to end its portfolio shrinking activities earlier than expected stating impact of partial U.S. government shutdown and ongoing trade wars on US economy as the reason. This caused the pair to hit new 3 month lows during yesterday’s American market hours. The decline was further supported by price action in crude oil market which saw significant upside move over last two trading sessions. Loonie being commodity-linked currency maintained price action near previous session lows across the day supported by broad-based US dollar’s weakness. However crude oil price fell today as EIA data showed that U.S. Crude stockpile maintained growth despite Saudi Arabia cutting back on its supply to the U.S. as part of OPEC’s production and supply cut.
This hinted that record production is still active in U.S. with a capacity to offset supply disruption from OPEC’s move. Loonie being commodity-linked currency lost ground as crude oil price fell which helped US dollar recover from intra-day lows. As of writing this article, USDCAD pair is trading flat at 1.3146 down by 0.01% on the day. Moving forward investors are focused on Sino-U.S. trade talk progress as the two-day session is set to end today and the outcome will decide long term outlook of both CAD and USD. Aside from Sino-U.S. trade talk, investors are also focused on Canadian GDP data and U.S. new home sales data scheduled to release later today for short term trading opportunities. The pair is expected to maintain consolidative action ahead of Sino-U.S. updates hitting the market with dollar facing strong resistance towards the upside near 1.3180 handle and support near 1.3110 handle respectively.
This article was originally posted on FX Empire