USD/CAD Daily Price Forecast – Loonie Gains Upper Hand as Geo-Political Events Drag Down US GreenbackLoonie gains momentum across the board after Bank of Canada business outlook survey update.
The USDCAD pair opened flat for the day but took a dovish turn across Monday’s Asian and European market hours owing to influence from multiple geo-political events. While the investor’s reaction was muted to miss in US retail sales data, Geo-political events such as crisis in Saudi Arabia, cautious market sentiment in Asian markets despite growth in Chinese trade data and weaker US Greenback in broad market, provided bullish influence to Loonie across Asian and European market hours. As of writing this article, the USDCAD pair is trading at 1.2963 down by 0.48% on the day. Earlier in the day, the pair peaked at 1.3050 before turning sharply to the downside and bottomed at 1.2959, a 5-day low.
BOC Business Survey Update Helped Loonie Make the Breakout
For now the pair is trading at the lows with the bearish tone intact and no signals of a rebound. The move lower was triggered by the Bank of Canada Business Outlook survey. Rate hike expectations rose after the report. Next week, the central bank is expected to deliver a hike and market participants also see a potential for another hike in December or January. The loonie reversed sharply against the US dollar, breaking a 2-day consolidation range. Earlier today, USD/CAD remained within 1.3000-1.3050 despite weaker-than-expected US retail sales data which makes the BOC survey major supporting factor of CAD bulls.
Weakness in the price of Western Canada Select owing to Record crude price differentials are weighing on Canada’s terms of trade while market participants reassess the outlook for relative central bank policy owing to lifting yield spreads in a CAD-negative manner. USDCAD has yet to deliver a sustained break of either its 50 or 100 day MA’s. Momentum signals are close to neutral and trend strength indicators are weak. The short-term technical outlook turned bearish with the recent slide that follows a rejection from levels above 1.3050 last week. To the downside, the immediate support is seen at 1.2950, 1.2925 and 1.2885. On the upside, resistance seems to be located at 1.3000, 1.3030 and 1.3050.