- Canadian dollar becomes the worst performer of the American session as USD/CAD spikes to 1.3307.
- Pair continues to correct higher after a decline of almost 300 pips.
On a quiet session, the USD/CAD pair offered a surprise move to the upside, after trading in a tight range for hours. The rally took place amid a decline in crude oil prices and a reversal in equity prices in Wall Street.
The pair was trading between 1.3250 and 1.3265, on a small range like AUD/USD and NZD/USD but it broke to the upside, while the other pairs continued to move sideways. It jumped to 1.3307, reaching the highest level since Friday.
As of writing trades at 1.3290, up 25 pips for the day as the DOW JONES now losses 0.24% after spending most of the day in positive territory. Crude oil is flat with the WTI holding at $53.25, down from levels near $54.00.
Correction, consolidation or more losses?
The pair continues to correct higher and could extend the recovery if it holds on top of 1.3300. The main short-term trend points to the downside, but after the dramatic decline of last week, some consolidation could be seen before another leg lower. A recovery back above 1.3400 could signal a bottom is in place. On the flip side, 1.3280 is the immediate support while below 1.3250, the bearish pressure will likely intensify.
On a wider perspective, analysts at Citibank, forecast USD/CAD at 1.33 in a 0-3 month period and 1.30 in 6-12 months. “The BoC remains data dependent. We note that we’ve already seen some evidence of a rebound with Canadian CESI & CEDI the highest
in G10, which may support CAD. A major risk to the forecast is escalating trade tensions though, which the BoC have continually referenced as a worry,“ they explained.
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