- Sluggish China PMI, WTI pullback, triggers the USD/CAD pullback from the 8-month low.
- Few more Manufacturing PMIs are in the spotlight for fresh direction.
Not only US Dollar (USD) strength on the back of successful trade truce between the US and China but latest pullback of crude prices also trigger the USD/CAD pair’s U-turn from February lows as it takes the bids to 1.3095 during early Monday.
The US Dollar (USD) recovered some of its previous losses as traders turn greenback friendly after the US President Donald Trump and his Chinese counterpart shook their hands to indicate temporary trade truce after the Saturday night dinner.
While the trade positive news should ideally help the commodity-linked currencies like the Canadian Dollar (CAD), a pullback of Canada’s largest export item crude weakened the Loonie.
Crude prices fail to portray the trade ceasefire between the world’s two largest economies amid receding geopolitical tension between the US and Turkey, coupled with uncertainty surrounding the extension of the global production cut agreement between the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Additionally, sluggish prints of China’s official Manufacturing and Non-Manufacturing Purchasing Managers’ Index (PMI) could also be cited as a reason for the pair’s U-turn.
Moving on, China’s Caixin Manufacturing PMI can act as an immediate catalyst for the pair ahead of the US manufacturing PMIs from Markit and the ISM. As per the market consensus, China’s private manufacturing gauge could weaken to 50.0 from 50.2 prior whereas its counterpart from the US Markit might remain unchanged at 50.1. Further, the US ISM Manufacturing PMI is expected to decline to 51.0 from 52.1.
Technical Analysis
The pair should successfully clear late-February low of near 1.3113 in order to regain its stand above 1.3150, if not then November 2018 bottom surrounding 1.3050 and 1.3000 round-figure seem close supports to watch.
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