USD/CAD Daily Price Forecast – USD/CAD Tests New Monthly Lows on Broad based USD Sell-Off

Traders shrug off NAFTA uncertainties amid fresh USD selling while bullish oil prices underpin Loonie and exert additional pressure.
Colin First
USD/CAD

After an initial uptick to 1.2990 levels, the USD/CAD pair met with some fresh supply and was seen extending overnight sharp retracement slide from a multi-day high level of 1.3065. On Tuesday, the pair struggled to sustain early up-move beyond the 100-day SMA and was being weighed down by a combination of factors – upbeat Canadian manufacturing sales and bullish crude oil prices. The pair weakened back below the key 1.30 psychological mark and kept losing ground through the early European session on Wednesday, shrugging off the uncertainties surrounding NAFTA negotiations. As of writing this article, USD/CAD pair is trading at 1.2945 down 0.22% on the day. Meanwhile, the US Dollar failed to capitalize on overnight goodish rebound from near seven-week lows and rather seemed unaffected by the ongoing upsurge in the US Treasury bond yields.

Oil Price Supports Canadian Loonie While USD Continues To Grow Weak on Sell Off Activity

In fact, yields on the benchmark 10-year bonds rose further beyond the 3.0% mark but did little to revive the USD demand and stall the pair’s ongoing downfall to fresh monthly lows.  The pair has now lost over 110-pips over the past 24-hours and now seems poised to continue with its bearish price action as traders now look forward to the US housing market data – building permits and housing starts, for some immediate respite for the bulls. The US and Canada continue to exchange sharp words over trade as NAFTA talks resume. According to Bloomberg, Representative Steve Scalise of Louisiana warned that patience for Canada was “wearing thin”, while Canadian Prime Minister Justin Trudeau continues to reiterate that he’d rather have no deal at all than a deal that is detrimental to Canada.

Thursday is being considered the deadline to submit any official paperwork leading to an agreement, before yet another self-imposed ‘deadline’ sails by with no agreement in place. A tentative deal was initially reached with Mexico in August, though despite President Donald Trump threatening to go ahead and redraft NAFTA with just Mexico, the US Senate has stopped short of backing up Trump’s statements, especially after Mexico has warned that it has no interest in a NAFTA deal without Canada. A follow-through selling pressure has the potential to continue dragging the pair further towards the 1.2900 handle en-route the very important 200-day SMA support near the 1.2865 region. On the flip side, the 1.2995-1.3000 region now becomes immediate strong hurdle and any subsequent up-moves might be capped at 100-day SMA hurdle near the 1.3045-50 region.

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