- Sustained downturn oil stocks and dovish FOMC portrays the USD/CAD pair’s weakness.
- Second-tier data from the US and Canada are in focus for further trade direction.
The US Dollar (USD) trades near 1.3285 versus its Canadian counterpart (CAD) during early Thursday. The USD/CAD pair declined after the official weekly oil stock report from EIA whereas the Fed’s monetary policy meeting outcome added further selling pressure. Traders may now observe second-tier data from the US and Canada in order to determine near-term market moves.
EIA crude oil stock change for the week ended on March 15 dropped to -9.589 million compared to +0.309 million forecast and -3.862 million prior. Depleting inventories amused energy bulls and propelled crude prices to fresh 2019 high. Crude being the largest export item of Canada, the Canadian Dollar (CAD) responded positively to the report.
Adding to the downside was monetary policy meeting result by the US federal open market committee (FOMC). The US Fed held its benchmark interest rates unchanged as widely expected but slashed expectations concerning future rate-hike from two lifts in 2019 to zero and one in 2020. The US central bank also signaled full-stop to balance sheet adjustments by the year-end.
Looking forward, the weekly release of initial jobless claims and monthly print of Philadelphia Fed manufacturing index from the US, together with Canadian wholesale sales, are expected to provide a fresh impulse to the USD/CAD pair.
Initial jobless claims for the week ended on March 15 could soften to 225K from 229K prior while Philadelphia Fed manufacturing survey might reverse earlier contraction of -4.1 with +4.5 figure during the current month. Further, January month Canadian wholesale sales are expected to grow by +0.5% against +0.3% prior.
USD/CAD Technical Analysis
The quote should portray sustained downturn under 50-day simple moving average (SMA) figure of 1.3265 in order to aim for 50% Fibonacci retracement of October – December upside around 1.3220 while 200-day SMA level of 1.3180 and five-month-old ascending support line, at 1.3170, can challenge sellers afterward.
On the upside, 1.3310, 1.3350 and 1.3375 can entertain short-term buyers ahead of challenging them by a downward sloping trend-line stretched since early January at 1.3430 now.