- Weaker Oil prices undermine Loonie and extend some support.
- Tumbling US bond yields weigh on the USD and capped gains.
- Traders eye US/Canadian data for some impetus ahead of FOMC.
The USD/CAD pair struggled to capitalize on an intraday uptick to 1-1/2 week tops and remained well within its two-day-old consolidative trading range, above the 1.3400 handle.
The pair managed to gain some positive traction on Tuesday and was now looking to build on last week’s solid rebound from multi-month lows amid a mildly weaker tone around Crude Oil prices. Despite escalating geopolitical tensions in the Middle East, Oil prices fell for the second day of Tuesday amid signs that global economic growth is being hit by the US-China trade war and undermined demand for the commodity-linked currency – Loonie.
The uptick, however, lacked any bullish conviction as investors seemed convinced that the Fed will eventually move to cut interest rates by the end of this year. This was evident from some renewed weakness in the US Treasury bond yields – further aggravated by the prevailing risk-off environment, which kept the US Dollar bulls on the defensive and turned out to be one of the key factors keeping a lid on any strong follow-through up-move for the major.
Hence, the key focus will remain on Wednesday’s FOMC monetary policy update. The US central bank is widely expected to leave interest rates unchanged but the updated economic/interest rate projections will play an important role in influencing the near-term USD price dynamics and help investors determine the pair’s next leg of a directional move.
In the meantime, Tuesday’s economic docket – featuring the second-tier releases of housing starts and building permits from the US, along with monthly Canadian manufacturing sales data will be looked upon for some short-term trading opportunities later during the early North-American session.
Technical levels to watch
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