USD/CAD Daily Price Forecast – USD/CAD Drops As Trade War Woes Drag Down US Dollar

The Canadian dollar rose on Thursday after Bank of Canada (BOC) Deputy Governor Carolyn Wilkins said that a breakdown in the US-Canada trade talks would not keep the central bank from raising interest rates. The Loonie had been under pressure for majority of yesterday’s trading session as comments out of Washington were not conclusive about the fate of the NAFTA 2.0. The Canadian central bank had kept interest rates unchanged on Wednesday giving little support for the currency. The comments from Deputy Governor Wilkins are a shot in the arm for the Canadian dollar ahead of employment data out of Canada and the United States on Friday. As of writing this article, USDCAD pair is trading at 1.3135 down 0.05% on the day as the pair has consolidated near Thursday’s lows across Friday’s early market hours.

CAD Gains Are Supported By Positive Sentiment Surrounding NAFTA Talks

Foreign Minister Freeland said yesterday that talks will recommence on Sep 8, 2018 and while some progress could be made during Friday’s talks it is highly unlikely that an official deal will be made. Some of US officials involved in the NAFTA talks are also of same opinion that talks which resume later today will not see a conclusive NAFTA deal.  However there is some hope for NAFTA’s future as USDCAD’s decline yesterday was triggered on comments from President Trump addressing supporters at a rally in Billings, Montana where he said US will make a fair deal with Canada on NAFTA talks which is a refreshing change from his recent speeches where he mentioned he is ready to proceed without Canada to create a bilateral trade deal.

US data was mixed, and the greenback continued moving on the global mood. A risk-averse atmosphere related to tariffs on China, Emerging Markets, and Brexit sent the dollar higher while optimism on these fronts weighed on the greenback. A steady reading of the US average hourly earnings for August is expected to add to the weight on the greenback. Apart from the US jobs data, the focus also remains on the Canadian employment report due at 1230 GMT for some trading impetus. Meanwhile, oil prices remain largely subdued amid persisting trade tensions, which is likely to have limited influence on the Loonie. When looking from technical perspective, the rising wedge breakdown, a bearish pattern, seen in the USD/CAD 15-minute chart has opened the doors to a sell-off towards 1.3025. On the way lower, the pair may encounter support at 1.3092 – trend line sloping downwards from the June 27 low and July 20 low. Expected support and resistance for the pair are at 1.3088, 1.3057, 1.3017 and 1.3143, 1.3175, 1.3200 respectively.