The USD/CAD pair retreated around 40-pips from Asian session high level of 1.3208 and is currently placed at the lower end of its daily trading range. For the second consecutive session, the pair struggled to build on its momentum beyond the 1.3200 handle and was being weighed down by the prevalent strong bullish sentiment around crude oil price. In fact, WTI crude oil continued with its recent upsurge and touched its highest level since Nov. 2014 amid reports that Libya declared force majeure on significant amounts of its supply which has provided great deal of bullish influence to Canadian Loonie. This along with firming prospects for a BOC rate hike in July underpinned the commodity-linked currency Loonie and was seen as one of the key factors capping any meaningful up-move for the US Dollar.
USDCAD Under Pressure
During early hours of Asian market hours the USD/CAD pair broke above the 1.32 mark in the early trading hours of the NA session and touched a new session top at 1.3225 as the upbeat PMI data from the United States helped the greenback gather more strength against its rivals. Markit’s final PMI report for June showed that the business activity in the manufacturing sector expanded at a faster pace than the report suggested in the previous estimate. Moreover, the ISM Manufacturing PMI improved to 60.2 in June from 58.7 in May to beat the experts’ estimate of 58.1. Boosted by these data, the US Dollar Index continued to retrace last Friday’s gains and rose to 94.88 before going into a consolidation phase.
There isn’t any major market-moving economic data due for release on Tuesday, either from the US or Canada, and hence, investors look forward to this week’s heavyweight macro data, including the keenly watched NFP, before positioning for the pair’s next leg of directional move. Market closes early in US owning to Independence Day celebrations. Immediate support is pegged near the 1.3135 area, below which the pair is likely to accelerate the fall towards the 1.3100 handle before eventually dropping to its next support near the 1.3065-60 region. On the flip side, the 1.3200-1.3210 region now seems to have emerged as an immediate hurdle, which if cleared might trigger a short-covering bounce towards 1.3265-70 supply zone ahead of the 1.3300 handle.
This article was originally posted on FX Empire
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