The USD/CAD pair has been falling sharply in last two trading sessions. This decline was especially accelerated in the American session spurred by dovish US inflation data and President Trump’s decision to opt out of nuclear deal with Iran. Loonie has received strong bullish support from hawkish building permits data in Canada market. Another factor that contributed to Canadian dollar’s increase in value is recent bullish rally in Crude Oil price. US President Trump’s decision is expected to lead to a tightened supply of crude in the global markets. Oil prices returned to 3 ½ year highs yesterday after the decision was announced. As of when writing this article the pair has seen price move to 1.2778 testing psychological support at 1.2770 price range.
USDCAD Corrects Lower
The North American Free Trade Agreement still presents the biggest risk to the Canadian dollar and should ultimately be the deciding factor on whether the BOC delivers further rate hikes. The negotiations have been going on for over eight months. Trade officials from the U.S., Mexico and Canada have indicated that progress has been made and if an agreement is reached, this should lead to a bullish outlook for the currency. Traders are on look out for NHPI, Employment Change and Unemployment data scheduled to release later today and tomorrow as a hawkish data would result in Loonie seeing further gains against US dollar. CAD can also viewed as top gainer against USD in last two trading sessions.
Oil Prices have increased as high as $70 post announcement from US and the enormous spread between Canadian oil and WTI has narrowed as well, down to $15 from more than $30 at one point. This scenario is viewed by many analysts as a huge tailwind in favor of CAD. Economic Calendar looks equally busy in US markets with Core CPI data, Federal Budget Balance and Initial jobless claims scheduled to release later today while Export price index and preliminary Michigan consumer expectations & sentiment data are scheduled to release tomorrow. Depending on outcome of macro data the pair has possibility to move on either side with equal momentum resulting in this pair seeing most volatility among most common traded pairs of the world for next two trading sessions. Expected support and resistance for the pair are at 1.2740 / 1.2682 and 1.2948 / 1.3000 respectively.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Bitcoin grinds slightly higher on Thursday
- Alt coins continue to bounce around on Thursday
- New Zealand dollar bounces on Thursday
- US dollar falls against Japanese yen on Thursday
- Natural gas rallies during Thursday session, breaking the $2.75 level
- Draghi and Trump to Drive the EUR and the USD through the Day