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USD/CAD Daily price Forecast – USD/CAD Rangebound Near Weekly Lows Ahead of US PPI Update

By:
Colin First
Published: Mar 13, 2019, 17:48 UTC

Bullish oil prices underpin Loonie adding a high level of downward pressure on USD as investors await US macro data for short term profit opportunities.

USD/CAD

The USDCAD pair yesterday suffered a sharp bearish decline during the latter half of yesterday’s trading session as US Dollar suffered dovish influence following the release of worse than expected US CPI data. US Greenback suffered additional bearish pressure as US Treasury Yields for 10-yr government bond declined by more than 1% in American market hours while Canadian Dollar has also been receiving some level of fundamental support across the day owing to positive crude oil price action in the broad market. Later in the day, US macro calendar saw the release of API weekly crude oil inventory data which showed an unexpectedly high draw in stockpile giving crude oil price a sharp boost in the broad market.

Crude Oil Price Underpins CAD Bulls

This helped the pair make a sharp nosedive to the downside hitting new weekly lows in Asian market hours. Post sharp declines during early Asian market hours, the pair is trading with range bound bias for rest of Asian session and a majority of European market hours as investors awaited US macro data for reaffirming yesterday’s directional cues. Canadian Dollar is a commodity-linked currency and remains strong when crude oil – the commodity linked with the currency trades positive in global markets. Owing to supply disruption from Venezuela on an unexpected power outage and reduced production & exports from Saudi Arabia Crude oil is trading well near monthly highs and has closed positive for the last three consecutive trading sessions providing CAD bulls with strong fundamental support.

On the release front today, Canadian macro calendar remains silent for the day while the US macro calendar sees the release of US PPI data, core durable goods orders and EIA weekly crude oil inventory data updates. A better than expected outcome in US macro data will help US Greenback recover its strength resulting in consolidation and rangebound price action near mid-1.33 handle while neutral or worse than expected outcome will lead to Canadian Dollar resuming last night’s decline and move below 1.3300 handle during today’s American market hours. When looking from a technical perspective, the path with least resistance is towards downside in immediate future owing to weak USD in the broad market. Expected support and resistance for the pair are at 1.3345, 1.3320, 1.3300 and 1.3375, 1.3390, 1.3407 respectively.

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About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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