- Challenges to global trade and growth take a toll on crude, Canada’s largest export item.
- Qualitative catalysts to join active economic calendar.
With crude prices declining to the lowest in 12-weeks, USD/CAD aims to challenge recent highs by trading near 1.3540 during early Friday. Investors keep a watch on Geopolitical concerns between Iran and Iraq while taking the latest Mexican tariff increase form the US as a negative sign to the global trade system and future growth.
Having witnessed a plunge on Thursday due to lesser than expected stockpile data from the API, the Crude prices initially recovered on Friday as Geopolitical tensions between Iran and Iraq grew serious. Latest comments from the Saudi Arabian King and Iraq’s President signal brighter chances of a war between the regional neighbors.
However, those gains couldn’t last long after the US President Donald Trump announced a tariff increase on Mexican goods to stop illegal migration into his country.
Given the latest political news reports increasing safe-haven buying and raising bars for the global trade system, market sentiment turned against commodities, which in turn weighed on the Loonie.
While qualitative catalysts to keep entertaining momentum traders, China’s official manufacturing and non-manufacturing purchasing manager index (PMI) numbers will be the immediate trigger to observe as it is the world’s largest commodity user.
The manufacturing PMI is likely to provide additional burden to commodities if matching 49.9 forecasts versus 50.1 earlier while non-manufacturing may have little strength despite expectations favor 54.5 mark against 54.3 prior.
Technical Analysis
Sustained break of the latest top, also the highest since January, at 1.3550 becomes necessary for the pair to question an ascending trend-line from January 03 around 1.3565/70, a break of which can further escalate the north-run towards 1.3615 and the year 2018 top near 1.3665.
On the downside, 1.3500 acts as immediate support ahead of highlighting 21-day simple moving average (SMA) level of 1.3460 and the 50-day SMA near 1.3420.
Share
