USD/CAD Daily Price Forecast – USD/CAD Range Bound Near 1.34 HandleThe USD struggles to build on the overnight upsurge owing to lack of bullish triggers.
The USD/CAD pair was seen consolidating overnight strong upsurge and remained confined in a narrow trading band, just above the 1.3400 handle. A combination of diverging forces failed to assist the pair to extend the overnight goodish up-move of nearly 125-pips and led to a subdued/range-bound price action through the Asian session on Tuesday. Yesterday’s upsurge was inspired by latest Brexit drama-led sell-off in the British Pound and sharp fall in crude oil price action. However subdued demand for USD and rebound in crude oil price action in broad market helped the pair move on range bound price action. As of writing this article, the USD/CAD pair is trading flat at 1.3390 down by 0.06% on the day.
Traders now eye US November PPI figures for some short-term opportunities
Meanwhile, broad based demand for USD also took a hit in response to reports stating that President Donald Trump fears impeachment after Democrats take over the House. The talk of impeachment has gathered pace in recent days following a filing from prosecutors which alleged that Trump committed an impeachable offense by directing Cohen to break the law during the 2016 presidential campaign. USD was further weighed down by investors concerns of fed rate hike’s forward guidance owing to recent inversion curve in T.Yield and disappointing macro data hinting at slowdown in US economy. On release front, Canadian calendar is silent with no releases planned for the day while US markets will see release of PPI data and US agriculture department’s World Agricultural Supply and Demand Estimates Report.
When looking from technical perspective, USD/CAD’s testing of new highs and the spread between US Treasury and Canadian Treasury 2-year yields nearing its widest in a year could signal near-term bullish momentum. Furthermore, weakening Canadian terms of trade and a decline in Western Select Crude oil prices, combined with dovish Bank of Canada comments could help turn the bullish momentum into a short to medium term rally. Any subsequent up-move is likely to confront some fresh supply near the 1.3445 region, above which the pair seems all set to aim towards reclaiming the key 1.3500 psychological mark. On the flip side, the 1.3380 level now seems to protect the immediate downside, which if broken might prompt some additional long-unwinding trade and accelerate the slide further towards the 1.3325-20 region en-route the 1.3300 handle.