- USD/CAD declines below 1.3300 amid WTI strength.
- Optimism surrounding US-China seems to fade due to headlines from Hong Kong.
- Canada’s second quarter (Q2) Gross Domestic Product (GDP) in the spotlight.
Despite latest risk-off emanating from Hong Kong, the USD/CAD pair remains on the back foot while taking rounds to 1.3285 during early Friday.
The pair recently benefited from China’s decision to wait for September talks before practicing recently announced tariffs on the US goods. Also benefiting the Canadian Dollar (CAD) was better than expected -9.80B Canadian Current Account deficit of -6.38B for the second quarter.
Further to the positive side is rising crude price as good news on trade and depleting oil inventories, coupled with long-standing geopolitical tension concerning the Middle East, play their roles.
On the contrary, investors have turned risk-averse off-late as recent news from Hong Kong indicates renewed geopolitical tension while also support the risk-off are details of China’s decision on trade tariffs concerning the US imports.
Investors will now wait for Canada’s Q2 GDP figures, while also keeping an eye over trade/political headlines, for fresh impulse. Market consensus favors a 2.0% annualized growth rate versus 2.1% prior but TD Securities seem too bullish on the outcome while saying that the Canadian economy likely turned in a solid performance in the second quarter, with our final growth tracking 3.3% (q/q, annualized).
Technical Analysis
A rising trend-line since July-end at 1.3244 becomes near-term key support, a break of which can drag the quote to mid-month low surrounding 1.3185. However, an upside clearance of 1.3345/50 could trigger the pair’s fresh run-up towards 1.3400 and then to June 18 high of 1.3434.
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