The USD/CAD pair’s attempted recovery move failed ahead of the 1.3200 handle, with bulls just managing to hold with modest daily gains. With investors looking past Friday’s better-than-expected Canadian GDP print, coming in to show m/m growth of 0.1% in April, resurgent US Dollar demand helped the pair to gain some positive traction at the start of a new trading week. This coupled with a modest retracement in crude oil prices, which tends to dent demand for the commodity-linked currency – Loonie provided an additional boost and lifted the pair to an intraday high level of 1.3189. The USD/CAD is trading range bound as the US Dollar rebounds across the broader market. Friday’s Dollar sell-off looks to have ended and the Greenback is on the rise, while at the same time the CAD is on standstill as crude oil prices face bearish headwinds after the weekend saw a resurgence of fears that Saudi Arabia would again begin pushing for production limit increases.
USDCAD Rebounds a Bit
Over the weekend, US President Trump tweeted that he and King Salman of Saudi Arabia agreed that oil production needs to rise in order to combat lifting prices, which saw new multi-year highs last week, though Saudi Arabia has stopped short of actually confirming they would increase their production capacity, keeping a floor under oil prices, which knocked sharply lower at the outset of the new trading week following the news. The White House eventually had to walk back the POTUS’ tweet statement, saying that Saudi Arabia is capable of increasing their daily output by 2 million bpd should it be required to stabilize prices. This caused USDCAD to see slight uptrend movement but the up-move lacked any strong conviction amid firming prospects for a BOC rate hike in July, which might continue to underpin the Canadian Dollar and keep a lid on any meaningful up-move for the major, at least for the time being.
The Bank of Canada (BOC) is expected to hike interest rates by 25 basis points this month, though the BoO is keeping a close eye on economic data coming out of Canada, and a downturn in figures released for the CAD could still see the BOC fall back on a rate hike. Moving ahead, today’s release of US ISM manufacturing PMI will be looked upon for some short-term trading opportunities during the early North-American session. Meanwhile, the Canadian markets will be closed in observance of Canada Day and hence, holiday-thinned liquidity conditions might lead to some unusual volatility later in the day. Immediate support is pegged near the 1.3140-30 region On the flip side, the 1.3190-1.3200 region now seems to act as an immediate hurdle, which if cleared might trigger a short-covering bounce towards 1.3265-70 supply zone.
This article was originally posted on FX Empire