- Buyers rely on the US-China trade truce, WTI declines but likely fresh tariffs on EU and USD pullback keep a check on the USD/CAD pair.
- Canadian Markit Manufacturing PMI and trade headlines to gain major market attention.
Although broad buying support in favor of the US Dollar (USD) restricted most commodity-linked currencies to benefit from the US-China trade ceasefire, the recent pullback in the greenback limits the USD/CAD pair’s moves around 1.3135 during early Tuesday.
In addition to the trade positive news from the world’s two biggest economies, upbeat ISM Manufacturing Purchasing Managers’ Index (PMI) form the US and weaker Crude prices also supported the Loonie pair’s upside on Monday.
Even if a nine-month extension to the oil production cut accord between the Organization of the Petroleum Exporting Countries (OPEC) and allies is almost certain, WTI is bearing the burden of recent USD strength while rift inside the alliance also plays its part to drag the energy benchmark down.
However, the latest proposal from the US Trade Representative’s office to levy fresh tariffs on the EU’s $4 billion worth of goods renewed trade worries and triggered the US Dollar’s pullback.
While trade headlines are likely to grab major market attention, Canada’s June month Manufacturing PMI from Markit will also be the key to watch. The activity gauge is expected to soften to 49.0 from 49.1 prior.
Technical Analysis
1.3110 and 1.3060 may act as immediate support ahead of diverting sellers to November 2018 bottom surrounding 1.3050 and 1.3000 round-figure. However, an upside clearance of late-February low near 1.3113 can trigger the quote’s rise to 1.3150 and then towards early-June bottom surrounding 1.3245.
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