- USD/CAD seesaws between 1.3185/90 after stopping the three-day rise on Friday.
- Trading sentiment stays positive on hopes of US stimulus, virus vaccine.
- WTI eases as US dollar prints mild gains, downbeat China data.
- Fed Chair Powell’s speech, Canadian Wholesale Sales and BOC Business Outlook Survey in the spotlight.
USD/CAD changes hands around 1.3190/85 ahead of Monday’s European session. In doing so, the loonie pair looks for a direction as the market’s risk-on sentiment combats WTI weakness and the US dollar recovery.
Global market sentiment improved on Monday, adding to the late Friday’s upbeat mood, as US President Donald Trump said that he wants the biggest stimulus plan than House Speaker Nancy Pelosi’s proposal. President Trump was earlier criticized for his lack of acceptance of a big budget on the coronavirus (COVID-19) stimulus. Also adding to the market’s optimism could be Trump’s reiteration that the COVID-19 vaccine will soon be out.
While cheering the risk-on mood, by an uptick in US stock futures and Asia-Pacific shares, traders also bought the US dollar as Friday’s welcome prints of Retail Sales and Michigan Consumer Sentiment Index renewed greenback buyers’ hopes.
Other than the risk-tone and USD buying, WTI’s weakness also restricts the USD/CAD moves as oil is the biggest export-item for Canada. Despite early-Asian gains, oil prices recently dropped as China’s GDP grew less than expected in the third quarter (Q3). Further, the OPEC+ meeting to assess the output cut compliance is also a reason for the black gold’s latest weakness.
Furthermore, USD/CAD traders’ cautious mood ahead of the Fed Chair Jerome Powell’s speech, also before the August month’s Wholesale Sales and quarterly results of the BOC Business Outlook Survey, can also be spotted for the pair’s latest choppy performance. While Powell’s bearish tone may challenge the USD bulls, expectedly positive data from Canada might help the bears to tighten the controls.
Technical analysis
Failures to cross 50-day SMA and a descending trend line from September 30, respectively around 1.3208 and 1.3215, keep USD/CAD bears directed towards the monthly low near 1.3100.
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