Yahoo Finance USD/CAD Daily Price Forecast – USD/CAD Flat Ahead of Canadian Housing Stats Data As Investors Await Updates on NAFTA Proceedings
The USD/CAD pair remained under some selling pressure on Tuesday and dropped to an intraday low level of 1.3131 in the last hour, albeit recovering from lows shortly. The pair is currently trading flat at 1.3157 down 0.05% on the day in mid-European market hours. Domestic rate expectations remain largely unchanged following Friday’s disappointing employment data, with OIS still pricing about 20bpts of tightening for the Bank of Canada’s October meeting. Yield spreads are also consolidating and Friday’s CFTC data revealed no material changes to speculators’ net short position. Measures of implied CAD volatility are rising and lifting the premium for protection against CAD weakness. This indicates that as long as the pair manages to remain above 1.31 handle medium to long term outlook remains in favor of US Greenback.
Neither Side of Pair Has Strong Update To Facilitate a Breakout Move Resulting in Short Term Neutral Price Action
However the pair extended overnight retracement slide from the 1.3200 neighborhood and was further weighed down by the prevalent US Dollar selling bias. This coupled with a modest uptick in crude oil prices underpinned the commodity-linked currency – Loonie and further collaborated to the pair’s offered tone. Further downside, however, remained limited as investors seemed to refrain from placing any aggressive bearish bets and await fresh developments in international trade disputes. Canada and the US will restart high-level talks on Tuesday and try to resolve stubborn differences over the North American Free Trade Agreement (NAFTA). As investors focus on trade talk proceedings and Crude oil price action, the short term outlook remains neutral or slightly in favor of Canadian Loonie.
Meanwhile, a general risk-off mood across European equity markets was seen lending some support to the greenback’s safe-haven status and further collaborated towards limiting any meaningful downfall. The pair has managed to rebound around 30-pips and is currently hovering around mid-1.3100’s, within Friday’s broader trading range. When looking from technical perspective, A follow-through weakness could get extended towards 50-day SMA, near the 1.3090 area, before the pair eventually drops to 100-day SMA support near the 1.3040 region. On the upside, any meaningful up-move might continue to confront some fresh supply near the 1.3200-1.3210 region, which if cleared now seems to lift the pair towards 1.3270-75 intermediate resistance en-route the 1.3300 handle.
This article was originally posted on FX Empire
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