- USD/CAD struggles to justify the mixed plays of greenback and oil.
- The USD remains on the front foot amid the latest safe-haven buying, energy prices benefit from the US-Middle East.
- The second-tier data from the US, Canada and trade/political news can offer fresh impulse.
USD/CAD declines to 1.2980, while staying modestly weak on a daily basis, amid Monday’s Asian session. The quote has recently been making rounds to the lowest since October 2018 as buyers and sellers struggle to prefer the USD over oil.
While increasing odds of the US-Iran war keep up the US dollar (USD) due to its safe-haven appeal, oil prices also rose to multi-month highs amid fears of depletion in the global energy supply. Recently, the US President tweeted to “quickly and fully strike back” to Iran’s attack over its targets in Kenya and Baghdad while Iran went on to a step further when offering $80 million to someone who kills the US leader. Even so, France, Germany and the UK are in the process to de-escalate the tension, despite silently supporting the US.
This has negatively affected the market’s risk sentiment and dragged the US 10-year treasury yields to one month low, around 1.779%, by the time of writing.
Also likely to challenge the pair’s upside is the latest downbeat print of the US ISM Manufacturing PMI that dropped to a decade low on Friday.
Looking forward, December month details of China’s Caixin Services PMI, prior 53.5, will precede Canada’s November month Industrial Production, expected -0.5% versus +0.1% prior. Also in the spotlight will be the US Markit PMI numbers, Composite and Services, which are both likely to remain unchanged at 52.2.
Technical Analysis
While October month low near 1.3040 offers immediate strong resistance, pair’s near-term declines will be challenged by the year-start low around 1.2940.
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