USDCAD pair is trading range bound today as conflicting factors support bulls from both sides of the pair. US Greenback has been recovering against Canadian dollar since last Wednesday and while profit booking activity at end of last week gave the Greenback a leg up, true factor that helped USD recover strength was yesterday’s disappointing import and export data from China which triggered a market wide sell of on all risk assets and major forex currencies which combined with investors caution towards today’s Brexit vote in UK parliament boosted demand for USD significantly. Further, the data also affected crude oil price action in the broad market yesterday which helped greenback see some gains against Canadian Loonie.
Crude Oil Price Continues To Play Major Role in Loonie’s Price Rally
However partial shutdown in US Government and Fe’s dovish stance on rate hike plans for 2019 as they patiently continue to observe the market resulted in lack of fundamental support for USD bulls to capitalize on yesterday’s recovery rally. However, USD managed to hold on to yesterday’s gains as investors in European markets continued cautious approach ahead of today’s Brexit vote. Meanwhile, China’s attempts to boost its economy and PBOC’s rate cut announcement hit headlines in Asian session today inspiring positive price action in Asian and European equities. This was also positive news for crude oil which erased previous session’s losses and traded positive across the day. Crude oil price is supported by OPEC’s planned production cuts but given the action from China who is the greatest importer of crude oil, the price action continues to remain volatile.
Latest update from China was highly favorable for crude oil and being linked to Crude oil, the commodity-based currency Canadian Loonie gained strength today and helped limit the upside move of the currency pair. As of writing this article, USDCAD pair is trading at 1.3233 down by 0.39% on the day. On release front, Canadian calendar is silent for the day, but the US market sees the release of PPI & trade balance data. There are also speeches from key fed members Kaplan and George and if their comments reaffirm recent dovish comments and patient stance of Fed on rate hike plans, dollar could fall further during US market hours. Overall an event filled American market hours are expected to keep the action highly active in USDCAD pair from a fundamentalist perspective.
This article was originally posted on FX Empire
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