USD/CAD Daily Price Forecast – USD/CAD Loses Ground As Greenback Feels Pressure Ahead of Trump-Putin Summit

The USD/CAD pair extended Friday’s retracement slide from the 1.3210 supply zone and traded with a mild negative bias through the early European session on Monday. The pair continued with its struggled to sustain/build on its momentum above the 1.3200 handle, with a modest US Dollar profit-taking, following a setback from import prices and consumer confidence data, prompting some fresh selling on Friday. The USD bulls remained on the back-foot and kept exerting some downward pressure at the start of a new trading week, albeit sliding crude oil prices, which tends to undermine demand for the commodity-linked currency – Loonie, helped limit deeper losses. Currently holding weaker below mid-1.3100s, investors focus now shifts to the US economic docket, highlighting the release of US monthly retail sales data and Empire State Manufacturing Index. This coupled with the Fed Chair Jerome Powell’s testimony on the Semiannual Monetary Policy Report, on Tuesday and Wednesday, might help determine the next leg of directional move.

USDCAD Choppy

In immediate future investors focus remains on Crude Oil price action, updates from Trump-Putin summit and US Retail sales data in US calendar and foreign securities purchase data on Canadian Calendar. With 12 Russians formally indicted in the still-ongoing Mueller investigation last Friday the Trump-Putin summit scheduled to occur today has caused global tension to reach new heights. US dollar remains strong against its global counterpart in long term thanks to hawkish comments from US Fed. U.S. Federal Reserve reiterated on Friday in its semi-annual Monetary Policy Report to the U.S. Congress that it expected “further gradual increases” in interest rates due to “solid” economic growth.

The Bank of Canada raised rates and left the bullish bias, signaling more rate hikes. The loonie initially soared on the hawkish hike. However, Stephen Poloz and co. are worried about trade, as it was clearly seen in the statement and in the press conference. On the trade front, the US is readying a tariffs list of no less than $200 billion worth of Chinese goods. With both sides having small news updates that could have triggered a move forward, the pair is at an impasse for a strong trigger to give one of them an impetus to move forward. Immediate support is pegged near the 1.3110-1.3100 region, below which the pair is likely to retest the 1.3065-60 zone before eventually dropping to test 50-day SMA support near the 1.3040 area. On the flip side, the 1.3200-1.3210 region might continue to act as an immediate strong hurdle, above which the pair is likely to accelerate the up-move towards 1.3265 intermediate support zone en-route the 1.3300 handle.