USD/CAD Daily Price Forecast – USD Gains Upper Hand Supported by T.Yield & Wall Street RecoveryOil-price action likely to remain the key driver amid a lack of fresh economic drivers and thin trading.
The USD/CAD pair finally breaks the upside consolidative channel on Thursday and reaches the highest levels since May 2017 at 1.3633 as the Loonie continues to face headwinds from the oil-price sell-off. The US oil WTI, dropped over 3% and tested the 45 support amid mounting global growth concerns and supply glut worries, as the OPEC output cuts will come into effect next month. The resource-linked Loonie ran into offers once again near 1.3570 region and fell to the cheapest levels in 18-months beyond the 1.36 level. Canada is heavily dependent on its revenues from oil exports. As of writing this article, USD/CAD pair is trading at 1.3600 up by 0.18% on the day.
Crude Oil Price Dynamics Continue To Affect Loonie’s Price Action
However, the bulls appear struggling to take on the upside towards the midpoint of the 1.36 handle, as the US dollar remains heavy across its main competitors amid a tumble in the US equity futures and Treasury yields, as the US political risks grow. The immediate focus is on the US API crude stocks data due later on Thursday for fresh direction on oil prices, which eventually have a significant impact on the CAD pair, as trading remains light heading into the New Year celebrations. On the release front, while Canadian calendar remains silent for the day, US calendar is scheduled to release CB consumer confidence data and New home sales data which are expected to provide some short term opportunities during US market hours.
When looking from technical perspective, the Dollar-Loonie pairing caught some lift from the bottom in early Thursday action, rising from 1.3566 to clip just shy of 1.3600, and the pair is beginning to run in the middle again as the intraday runs out of steam in 5 min chart and when looking in 4 hr chart, past two months have seen the CAD give up ground to the US Dollar in one-way action, but the overextended chart pattern is likely to see buyers holding back as they wait for a pullback into the 1.3300 zone before reloading long positions on USD/CAD.