USD/CAD Daily Price Forecast – Loonie Continues To Trade Near Monthly Lows Ahead of Powell’s SpeechUS Greenback failed to make best of recovery move in Asian market hours as crude oil price continues to support Loonie bulls
USD/CAD pair is experiencing a two way price action today on news driven momentum and continues to remain as the only risk asset that doesn’t follow similar price pattern as other major dollar denominated risk fx pair. Canadian Loonie continues to receive fundamental support from Crude Oil price action in broad market and broad based USD’s weakness. The pair saw slight upward price action in Asian market hours over Comments from Bank of Canada’s governor Stephen Poloz who commented yesterday that rate hike would be data dependent and kept interest rates unchanged. Given recent economic slowdown and decline in crude oil price in Q3 FY 2018-19, macro data of late has been highly dovish and this is viewed as negative factor for Loonie.
Crude oil Price Continues To Underpin Loonie
Cues from BOC MPC update and profit booking activity in Asian market hours which saw major equity indices and forex pairs trade in red post three consecutive sessions of positive price action helped USD gain upper hand slightly. Further USD bulls received some support as crude oil declines nearly 1% on US EIA crude oil inventory data which saw US Crude Oil production remain near record high. However USD failed to capitalize on rebound resulting in pair falling back near monthly lows. Spot Crude price for WTI is still above $50 and crude oil has gained over 10% since Jan 2 which underpins commodity linked currency Canadian Loonie in broad market. Further USD still suffers from overnight headlines in US market which saw dovish comment from many key FOMC members and dovish rate hike outlook for 2019 in latest fed meeting minutes released yesterday.
As of writing this article, USD/CAD pair is trading at 1.3220 up by 0.07% on the day. On release front, both US & Canadian calendar are busy for the night. Canadian market sees the release of new housing price index data and building permits data while US market sees the release of initial jobless claims, new home sales data and a speech by Fed Chair Jerome Powell. Post yesterday’s dovish fed member comments and meeting minutes update, investors and analysts are keenly waiting for comments from Fed Chair Powell which is expected to set pace for end of week’s trading session. Moving forward dovish comments from Powell will influence further bearish price action which could take the pair below mid 1.31 price range. On the flip side the pair will move in range bound action well near today’s high and lows.