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USDCAD Tumbles Down Post Dovish Crude Oil Inventory Update

By:
Colin First
Published: May 24, 2018, 06:46 UTC

The USDCAD is getting pushed around by the fluctuations in the strength of the dollar and oil

USDCAD Thursday

The USD/CAD pair is being whipped around by oil, broad USD moves and China sentiment but the next big swing will come from the Bank of Canada decision on May 30. The pair established a high of the day at 1.2917 in the American session and then retreated back below the 1.2850 level after the FOMC’s minutes. The Loonie is currently trading at around 1.2855 but the pair continues to remain well inside wider price band which has gripped the pair over a month now.

USDCAD Whipsaws

One of the main reasons for Loonie’s headway against Greenback is yesterday’s mixed macro data outcome. Loonie being a commodity linked currency (linked to Crude Oil) saw its bull become active post a dovish outcome in Crude Oil Inventory and Weekly API Crude Oil stock / EIA Distillates stock data.
The Canadian Economic Calendar remains light for the rest of the week, however US calendar has a busy schedule ahead. Yesterday’s FOMC update boosted investors and analysts belief of a rate hike in June 2018 and also hinted at possibility of two more rate hikes in Economic and Inflation growth continues. This resulted in Greenback capping Loonie’s gains during early Asian market hours. Investors are currently waiting for Home sales data and Initial Jobless claims data scheduled to release later today and also await speech by FOMC members Bostic, Dudley and Harker.

USDCAD Hourly
USDCAD Hourly

One of the main factors that is currently weighing down Loonie is the uncertainty surrounding NAFTA negotiations. Without clarity on prospects for the North American Free Trade Agreement, which is being renegotiated by Canada, the United States and Mexico, it may be difficult for the pair to exit its recent range of resistance levels around $1.2730 to $1.2998. Canada sends about 75 per cent of its exports to the United States, so its economy could be hurt if a deal on NAFTA is not reached soon. Expected support and resistance for the pair are at 1.2783 / 1.2723 and 1.2922 / 1.3024 respectively.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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