USD/CAD: bears in control on the prospects of the dollar's imminent collapse, 1.2700s here we come

• USD/CAD headed for a test of the near-term objective of 1.2700s.
• Indeed, next week's FOMC is going to be the decider for the fate of the dollar this year and will be weighed up in comparison to a hawkish BoC - Much will depend upon the FOMC's forward projections.

USD/CAD may have caught many traders out whereby the loonie has been a strong performer regardless of the prolonged trade negotiations between the US and Canada taking an eternity - which would otherwise have been interpreted as a sign that there are some major sticking points that are hankering prospects of a deal ever being made. We saw how cautious the CAD bulls were yesterday on that huge spike from 1.2954 to 1.3015 when headlines that a deal is unlikely to be done this week caught traders on guard - Trump also said that Canada is not in a good trade position while there NAFTA talks drag on. 

However, as analysts at Scotiabank note, NAFTA hopes continue to "simmer supportively for the CAD, for now". Today, US/Canada negotiators have been at it still. However, Canada wants guarantees it won't be hit with auto tariffs which sound to be the new sticking point. Press reports last night hinted at some concessions from the US  - "The United States has backed away from its contentious demands for lucrative procurement projects in the renegotiation of the North American Free Trade Agreement," The Canadian Press reported. Also, uncertainty is building over the fate of the promised Indigenous chapter in NAFTA, and it may not go down too well with the national chief of the Assembly of First Nations if Freelander forfeits such an opportunity to for the country with respect to economic reconciliations with First Nations.

All depends on the FOMC now

Elsewhere, the weakness in the greenback is sending the commodity complex higher as observes consider improvements in global economic growth. The CRB index has been extending its June rally from down at 164.54. The index is now en-route to 193.65, currently trading at 192.88, just below the 192.98 high for today' and is just a few trades away from the daily trend line resistance. (This index has been comprised of a basket of 19 commodities, with 39% allocated to energy contracts, 41% to agriculture, 7% to precious metals and 13% to industrial metals, all of which the CAD is linked closely to). Also, and very directly,  WTI crude oil is standing out with a fresh at 71.33 scored earlier (albeit currently sinking back to a low of 70.21 at the time of writing). Indeed, next week's FOMC is going to be the decider for the fate of the dollar this year and will be weighed up in comparison to a hawkish BoC - Much will depend upon the FOMC's forward projections.

USD/CAD levels

According to analysts at Scotiabank, "USD/CAD short-term technicals: Bearish—the CAD has positive momentum on its side against the USD, with funds sliding below key support points (1.3110 last week, 1.2980/00 this week). The trend is your friend. Below 1.2890 opens up the downside for a push to the mid 1.27s. Resistance is 1.2980."