- USD/CAD fails to respect the previous day’s recovery as WTI stays firm around a multi-month high.
- Trade positive statements from the US also drag the pair to the south.
- Canada’s November month inflation numbers in focus for now.
USD/CAD ignores the previous pullback while declining to 1.3160 during early Wednesday. The Loonie pair seems to take clues from the WTI’s run-up to fresh highs since September as oil is the biggest export item for Canada. The quote earlier benefited from the US Dollar’s (USD) overall strength and market’s move against commodity-linked currencies.
Trade positive comments from the US diplomats like Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer seems to have pleased the energy traders during the early Asian session. The same could be witnessed in the pair’s declines.
The quote earlier recovered as the greenback cheered upbeat industrial production and housing data while also taking advantage of mostly positive Fedspeak and weaker than expected figures of Canadian Manufacturing Sales. It’s worth mentioning that the doubts over the future trade relationship between the US and China also contributed to the pair’s previous pullback.
With this, the market’s risk tone stays mostly clueless with the US 10-year treasury yields saying unchanged around 1.88%.
Moving on, traders will now concentrate on the Canadian Consumer Price Index and Bank of Canada’s (BOC) Consumer Price Index data for fresh impulse. While BOC’s Core CPI is less likely to move from 1.9% YoY, likely declines to -0.2% from +0.4% prior may drive the pair again towards the north.
Technical Analysis
50-day Simple Moving Average (SMA) around 1.3200 acts as an immediate upside barrier for the pair whereas 1.3100 and a rising trend line since July, at 1.3050 now, can limit pair’s short-term declines.
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