USD/CAD Daily Price Forecast – USD Gains Momentum on Weak Crude Oil PriceA sharp fall in oil prices undermined Loonie and helped USD regain positive momentum ahead of US macro data updates.
The USDCAD pair yesterday traded rangebound across Asian session and a majority of Asian session but saw a sharp decline in American market hours owing mixed cues on Sino-U.S. trade talks and worse than expected US macro data update. The overnight declines saw the pair fall below 1.3300 handle but as CAD bulls lacked the strength to build a rally the pair managed to regain its hold over above-mentioned price level shortly. As tensions surrounding Sino-U.S. trade talks eased over reports of a telephone conversation between US & China representatives, the US dollar regained its positive price action in the broad market.
Concerns of Global Economic Slowdown Impact Crude Oil Price
Further, comments from Bank of Japan members during today’s interest rate decision update stating that the global economy is slowing down weighed investor sentiment and affected risk appetite in the broad market. While the impact of said comments was not that clearly visible in investor sentiment, the impact of the comments on the crude oil market was clearly visible in global crude oil price action. The slowdown in the global economy is an indirect indication for low demand for crude oil as the slow economic activity would mean slow industrial activity. The recent data from the US & China which was highly disappointing added credibility to words from BOJ members speech and this caused crude oil price to decline sharply across the day.
Canadian Loonie being a commodity-linked currency declined sharply owing to the dovish crude oil price in the broad market. Investors are now eyeing macro data updates for directional cues as the trading session comes to close for the week. On the release front today, Canadian calendar will see the release of Manufacturing sales data while the US calendar will see the release of Industrial production data, JOLTs Job openings data, Michigan Consumer Sentiment and Michigan Consumer Expectations data. Moving forward, the pair needs to breach resistance near 1.3350 & 1.3400 handle for USD to gain solid bullish price momentum while a decline below support at 1.3300, 1.3260 handle is required for CAD to regain control of price action.
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