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USD/CAD Daily Price Forecast – USD/CAD Remains Downtrend despite Slide in Crude Oil Price

By:
Colin First
Updated: Jul 17, 2018, 13:44 UTC

The pair has been in tight consolidation awaiting the speech from Powell later in the day

CAD

Following a consolidation phase around 1.3150 during the first half Monday’s trading session, the USD/CAD pair dropped to a fresh session low at 1.3110 during American market hours and found support there to steady near 1.3130. As of writing, the pair is trading at 1.31217 seeing 0.11% decrease in value. The pair saw a major gap down move in early hours on London market session. The pair’s steady decline seems to be the product of a weaker greenback. After failing to break above the 95 mark on Friday, the US Dollar Index closed the week at 94.50 and the bearish momentum stayed intact amid a lack of fresh catalysts that could wake the bulls up, On Monday the index fell to a daily low at 94.15 in the early NA session and continued its bearish range bound movement for majority of Asian market hours on Tuesday. At the moment, the DXY is relatively quiet around 94.37, down 0.15% on the day.

USDCAD Lower

The data from the U.S. showed that retail sales increased by 0.5% in June to match the market expectation while the NY Fed Manufacturing Index eased to 22.6 in July from 25 in June, showing that the business activity in the NY area lost a little bit of momentum. On the other hand, the pair’s downside seems to be limited with the commodity-sensitive loonie struggling to gather strength with crude oil prices recording sharp losses on Monday. The barrel of West Texas Intermediate lost more than 4% and touched its lowest level in more than three weeks below $67 on Monday as concerns over supply disruptions continued to ease.

USDCAD Hourly
USDCAD Hourly

On the release front, Canadian market will see manufacturing sales data while US markets see a speech by Fed Chair Jerome Powell. Greenback continued to face pressure as Trump who flaunts “America first” attitude remained very silent in his meeting with Russian President Vladimir Putin and failed to comment on Russian interference in American Presidential election which drew a lot of criticism from US citizen. US Greenback continued to maintain bearish stance with the majority of global currency pairs and is expected to remain dovish ahead of Fed Chair Powell’s Speech. Domestic rate expectations are steady with OIS pricing roughly 18bpts of BOC tightening by December. Yield spreads are also unchanged, and CAD outlook continues to trade with a modest discount in short-medium term against US Greenback. Expected support and resistance for the pair are at 1.3100 / 1.3070 / 1.3040 and 1.3155 / 1.3185 / 1.3210 respectively.

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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