USD/CAD Daily Price Forecast – USDCAD Rangebound Near Mid-1.31 Handle Ahead of Powell’s Speech

The USDCAD pair today saw sharp two-way price action in the broad market following yesterday’s sharp declines. The pair yesterday fell sharp on positive crude oil price in the broad market, but the pair resumed upside price move during north American market hours as headlines from the US caused USD bulls to gain momentum in the broad market. US Trade Representative Robert  Lighthizer commented last night tariff threat on Chinese goods is likely to last longer and this dented optimism surrounding trade talks between two nations. Robert stated that the Chinese have yet to make big concessions over key issues such as curtailing state subsidies and ending the forced transfer of intellectual property.

Late Rebound in Crude Oil Price Prevents USD’s Rebound

This renewed the fears of US Tariff on Chinese goods as the current scenario suggests that there is a high chance for the USA to move ahead with plans to impose a tariff. This along with reports from China which signaled a slowdown in factory output hinting at slowdown in the economy. Lower factory output in China hints at lower consumption of crude oil owing to reduced demand. As China is the world’s largest importer of crude oil, price per barrel fell sharp in the broad market. Upbeat US EIA crude oil stockpile added to bearish influence surrounding crude oil. Canadian Loonie being a commodity-linked currency declined owing to a fall in crude oil price further supporting USD’s positive price run. USD was also supported by a spike in US government bond yields adding strength the rally in favor of US Greenback.

While the pair managed to cross 1.32 handle once again in Asian market hours today, profit booking activity resulted in the pair declining from intra-day highs back near the mid-1.31 handle. However, disappointing Canadian CPI data failed to provide CAD with momentum required to take the pair on a bearish nosedive. On the other hand, positive preliminary GDP data from the USA provided dollar with fundamental support to prevent further decline, while a late rebound in crude oil price in early American market hours prevented Dollar from regaining positive price action ahead of Fed Chair Powell’s speech resulting in rangebound price action near the mid-1.31 handle. If Powell’s speech mirrors his recent dovish tone, the pair is likely to continue range bound price action for rest of the day.

Please let us know what you think in the comments below