The USDCAD pair has moved quite lower with US Greenback losing strength in early half of week as investors choose to move to global currencies ahead of US Independence day celebrations. As US dollar saw its value go down, all major currencies made some bullish stride. With Crude oil price continuing to grow higher USDCAD capitalized on momentum and went as low as 1.3107 however US greenback is slowly resuming strength since trading session began early Thursday. US Greenback continues to face some pressure over global trade war and Trump’s twitter tantrums over Crude Oil price movement.
USDCAD Continues to Consolidate
The near-term balance of risk favors CAD strength into the July 11 Bank of Canada interest rate decision. According to some analysts, market participants have firm expectations for a 25bpt hike. Yield spreads have narrowed considerably from the extended levels observed in late June and measures of sentiment have recovered, suggesting a clear turn and erosion in the premium for protection against CAD weakness. While the dollar gives a little bit of ground back across the board commodities, in general have been able to deliver some added support to the downside case in the pair whereby the price of Western Canada Select has almost fully retraced its decline from mid-May and the price of WTI has broken above $75 per barrel for the first time since late 2014.
Ongoing geo-political energy wars over Trump’s sanctions on Iran and Iran’s threat to close down the Strait of Hormuz in the Gulf which is a key point for transport of Crude Oil among gulf countries have taken center stage recently and the proceedings would greatly affect Crude Oil price in near future but the price is expected to remain above $70 per barrel which supports CAD’s upwards momentum. On release front, we have the ADP private employment, initial jobless claims, ISM non-manufacturing index and the FOMC minutes in US market hours with no updates in Canadian calendar scheduled for the day. Investors await FOMC minutes update as a hawkish outcome could give USD much needed trigger for upward movement while dovish stance would help Loonie make further headway against the major. Moving forward the USDCAD pair is expected to remain well above 1.31 handle during today’s trading session ahead of FOMC update.
This article was originally posted on FX Empire
More From FXEMPIRE:
- ADP Payrolls Set to Rise. Fed Minutes in Focus
- Commodities Daily Forecast – July 5, 2018
- E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – July 5, 2018 Forecast
- ADP “Miss” May Actually Force Fed to Be More Aggressive
- Binance Suspends Trading Due to Suspicious Syscoin Transactions
- USD/JPY is Bullish Prior to ADP