The Loonie pair had made a 0.77% massive drop last night following the plunge in the Greenback. The USD Index had fallen yesterday around 0.59% after the Fed’s Interest rate announcement.
The Fed has decided to keep the interest rates unchanged at 2.5% for the time being. The Central Bank stays positive over the economic outlook. The policymakers continue to believe in the economy and hope for a recovery soon. However, the Bank hinted that it might opt for a rate cut in the future depending upon the incoming information. The positive outlook got developed over the low unemployment figures and decent consumer spending. Despite that, the ongoing trade tensions and sluggishness in the manufacturing sector kept the pressure intact.
“It’s important,” said Fed Chairman Jerome Powell in a news conference, “that monetary policy does not overreact to any individual data point or short-term swing in sentiment. Doing so would risk adding even more uncertainty to the outlook.”
Along with the Greenback slowdown, the strengthening Loonie continued to add more pressure to the pair’s movements. Yesterday, the Canadian CPI figures elevated the market sentiment. The May CPI reports had recorded higher-than-market expectations. Good reports on the inflation front show definite signs of improvement for the Canadian economy. The market now anticipates the Canadian April Retail Sales data about to release on Friday. However, the Street analysts stay pretty bearish over the figures, calling for a Loonie weakness.
Meanwhile, the Crude prices continued to stick to the weekly top near $54.93 bbl. The latest price surge came after the EIA reported a decrease in the Crude stockpiles computed since June 14. Finally, OPEC and its allies have fixed a meeting date to discuss regarding supply cuts. OPEC members would meet up on July 1 followed by a meeting with the non-OPEC members on July 2.
Significant Economic Events
Up next in the US economic docket is the June Continuing and Initial Jobless Claims figures. The consensus estimates the unemployment statistics to decline slightly this time. Traders also eye the June Philadelphia Fed Manufacturing Survey data, expecting a 50.9% decline over prior 16.6.
Canadian May ADP Employment Change is also something that needs a closer watch. This Jobs data had reported 61.7K last time.
The USD/CAD pair had experienced a sharp pullback on last night. In the initial stage of the tumble rally, the pair had attempted to move upwards. Anyhow, the pair got rebounded after hitting the strong 1.3366 resistance mark. And, on the downside, the fall finally found some support near 1.3238 levels in the Asian session. Most of the significant SMA traveled well above the pair confirming the bearish trend. Quite notably, the short term 50-days SMA was heading south aiming the pair. Hence, in the near term, possibilities for a small recovery stays alive.
The overall uptrend seems exhausted as the Loonie pair has already crossed below the 2:1 Gann line. The pair had managed earlier to re-enter above the 2:1 Gann line taking support at 3:1 Gann line. However, the pair slipped again and crossed below the 3:1 Gann line, putting an end to the positive trend.
This article was originally posted on FX Empire
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