USDCAD Daily Price Forecast – USD/CAD Rangebound Ahead of US Retail Sales Update

The USDCAD pair traded positive for the majority of last week but closed on a dovish note on Friday. While the pair managed to retain its positive price action for a majority of Friday, the American market hours saw US macro data turn out to be mixed with key updates seeing worse than expected outcome and this led to US dollar suffering sharp decline in the broad market across all major global currencies. However, the decline was limited owing to dovish crude oil price which weighed down CAD bulls thereby preventing a sharp slide to the bottom. Once trading activity began for the week during Pacific-Asian market hours today, the pair continued to extend Friday’s decline for quite a while before bears actually settled down.

Positive Crude Oil Price Underpins CAD bulls

The CAD bulls were initially supported by the fact that USD remained weak across Asian and early European market hours owing to lingering influence from Friday’s mixed macro data outcome. Canadian Dollar also received support from positive crude oil price in the broad market. CAD being a commodity-linked currency gains strength whenever Crude oil price goes higher in the broad market. Crude oil price gained positive momentum in the global market today as Saudi Arabia officially confirmed the reduction of crude output for the month of April with plans to reduce crude oil output by less than 7 million bpd giving crude oil bulls strong support.

However, investors were cautious ahead of the highly eventful calendar and held back from placing any major bets ahead of macro data updates and this helped prevent sharp declines to the downside. On the release front, while Canadian calendar remains silent for the day, US macro calendar will see the release of retail sales data and speech by Fed Chair Jerome Powell later in the day. The price action for the pair has remained well above 1.3400 for a majority of the day which suggests that CAD bulls lacked the strength to make use of the opportunity provided by weak USD to build a rally in its favor. Having lost its chance to boost further downside move the pair has calmed down significantly resulting in range bound action with neutral bias ahead of macro data update. A positive reading for US macro data and less dovish than expected speech by Fed Chair Jerome Powell will give USD bulls strength needed to erase all early suffered today and last Friday pushing the pair back to last weeks high near mid 1.34 handle while dovish macro data will lead to continued rangebound price action.

Please feel free to get back to us for any assistance.