USD/CAD Daily Price Forecast – USD/CAD Range Bound Ahead of US Retail Sales Data

The USD/CAD pair caught some fresh bids on Wednesday and recovered a part of previous session’s steep fall to mid-1.3000’s horizontal support. A combination of supporting factors helped the pair this week’s sharp retracement slide from three-week tops, around the 1.3170 region touched on Monday, and regain positive traction. The US Dollar stood tall near 14-month tops and continues to benefit from safe-haven flows amid concerns about Turkey’s financial crisis. However a lack of powerful trigger has resulted in USDCAD pair turning range bound and is currently trading around 1.3083 handle up 0.19% on the day. Adding to this, a follow-through retracement in crude oil prices weighed down by an overnight report showing a rise in the US crude inventories, further undermined demand for the commodity-linked currency – Loonie and collaborated to the positive tone surrounding the major. Despite a goodish bounce, the pair remains below the 1.3100 handle as traders seemed to hold back from placing aggressive bets ahead of today’s important release of the US monthly retail sales data. This coupled with the official EIA report on the weekly US crude oil inventories might produce some meaningful trading opportunities.

Canadian Finance Minister’s Comments Help Canada Remain Strong Despite Growing USD’s Strength

The Canadian Dollar was easily the best performing major on Tuesday, even surpassing the US Dollar. Its appreciation appeared to be linked to a chain of events rather than one singular update. During the European trading session, CAD rose with crude oil prices which rejoiced in the aftermath of an OPEC report showing an unexpected contraction in Saudi output. In the US trading session, the greenback rallied as a reduction in Turkey contagion fears improved market wide mood. After rising over 20% in recent days, USD/TRY headed lower as much as 7% on Tuesday. Stocks rejoiced both in the US and Canada as the S&P 500 and TSX Composite rose about 0.64% and 0.49% respectively. A strong US Dollar made crude oil relatively cheaper, the commodity relinquished earlier gains. However, CAD still remains strong and this is due to comments from Canada’s Finance Minister Bill Morneau seeking to potentially protect their metal industry. Amidst a risk of a surge in steel imports after the US imposed metal tariffs on them, he said that they will apply safeguards if industry harm is shown.

On release front, Calendar in Canadian market remains silent for the day while US markets will see release of retail sales, Industrial production and Crude Oil inventory data. However Canadian calendar will become busy in next two business days as market will see release of Manufacturing sales & Core CPI data. From technical perspective, the price action indicates that the pair is at a standstill waiting for a breakout trigger and a good enough news could push market in favor of either side of the pair. Any subsequent up-move is likely to confront resistance near the 1.3100 handle and is closely followed by 50-day SMA hurdle near the 1.3125 area, above which the pair is likely to aim back towards testing multi-week tops, around the 1.3170 region. On the flip side, a sustained weakness below an important horizontal support near mid-1.3000’s might now turn the pair vulnerable to drop back below the key 1.3000 psychological mark and aim towards retesting 100-day SMA support, near the 1.2975-70 region.