USD/CAD Daily Price Forecast – USD/CAD Continues Downward Slide on Weak US Greenback

USDCAD pair has been on a steady downtrend movement for past four consecutive trading sessions. One of the major reasons for continous decline is result of US Greenback’s weakness rather than strong Canadian dollar. While CAD did get an initial boost owing to unexpectedly strong macro data in Canadian calendar, the momentum from same was very short lived. Ever since trading session began for this week sentiment surrounding US dollar has been dovish and there have been multipl factors which lead to this situation. One of the main reasons for softer USD is selling activity on profit booking activities, however the dovish sentiment continued to increase despitedecrease in selling activity as US President Trump once again expressed his dis-satisfaction over dollar’s strength and the direction in which US Fed is moving on  rate hike decisions.

Dollar’s Weakness Dictates Momentm of USDCAD Pair

As this comment came just around the time of FOMC update, investors across globe took a cautious stance bracing for impact on a situation where Fed could cancel rate hikes planned early in response to Trump’s dis-satisfaction. Some of the other factors are US President Donald Trump appointing low level office members for trade related talks with China and commenting that he does not expect a resolution in trade war with China from the talks and also mentioning additional 25% tariff to be imposed on Europe which brought back trade war woes into main focus of investors. While USD gained a lot of strength and momentum in recent past owing to investors preferring US Greenback of safe haven currency, it was mostly due to positive long term outlook for USD as a result of multiple rate hikes planned by the Fed.

A weak US Greenback could continue to garner additional bearish influence if FOMC update today takes on a bearish stance. So far Fed members have commented that rate hikes will take place as per existing plan as long as US economy remains positive. Investors now await FOMC update & Sino-U.S. trade talk outcome for clues on how to proceed further. A weak US Greenback makes dollar denominated crude oil easier to purchase for emerging countries which has boosted Crude oil market providing some positive influence to Canadian Loonie. However macro data that has come so far this week have been a disappointment which clearly shows the downtrend movement of the pair in today’s trading session is more a result of USD’s weakness rather than a result of strong Loonie. As of writing the article, USDCAD pair is trading at $1.3019 down 0.14% on the day and is expected to maintain dovish stance ahead of FOMC update.