USD/CAD Daily Price Forecast – USD Steady Above 1.3400 Handle

The USDCAD pair saw steady upside price action on Wednesday. The upside price action was influenced by risk-averse trading activity in the global market. Risk-averse trading activity boosts US Dollar in the broad market owing to sell-off of high-risk assets. US Dollar has lately been viewed as safe haven assets and since most major forex pairs are denominated in USD a sell-off of major currencies has a tendency to boost USD. There was also weak crude oil price action influenced by API weekly crude oil inventory data from the US which weighed down loonie resulting in USD bulls gaining positive influence. While the influencing factors varied slightly, the US dollar managed to retain its positive price action across Asian and the majority of the European session.

US GDP Data Eyed For Directional Cues

The headlines on US delegates visit to China for two-day trade talk with Chinese counterparts boosted investor risk appetite while also resulting in a broad-based USD sell-off. However, USDCAD pair continued to maintain positive price action across the day as Crude oil price fell further today resulting in Loonie suffering significant bearish pressure. US EIA weekly crude oil inventory data also showed a sharp increase in the stockpile. This caused crude oil to fall nearly twice as much as it did during the previous session. Canadian Loonie being a commodity-linked currency suffered high-level of bearish influence. This helped the US dollar retain positive momentum above 1.34 handle despite its weakness in the global market.

Further, US T.Yields saw downside action which weakened Greenback further. Government bond yields of most major economies including Canada are seeing activity hinting at a recession in respective economies. This plays a major role in influencing investors risk appetite limiting gains despite some level of healthy risk appetite in the market. Investors now await macro data updates for short term profit opportunities and directional cues. While the Canadian calendar remains silent for the day, the US calendar sees the release of Q4 GDP data and pending home sales data. These updates will provide cues for price action in American market hours. A positive US macro data outcome will help the pair move towards 1.3500 handle while dovish outcome will lead to continued range bound action above 1.3400 handle.

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