- USD/CAD registers four-day losing streak while refreshing two-month low.
- Optimism surrounding the US-China phase-one trade deal and upbeat China Manufacturing PMI helps commodity-linked currencies.
- Broad US dollar weakness, WTI strength exert additional downside pressure.
USD/CAD drops to 1.3048 while heading into the European open on Tuesday. The Loonie pair recently benefited from China’s sustained manufacturing strength and increasing odds of the US-China trade deal. Also increasing the Canadian dollar (CAD) strength is optimism surrounding Canada’s largest export item, oil.
China’s official Manufacturing PMI marked a 50+ number for the second time in a row, suggesting a sustained recovery of the key sector of the world’s second-largest economy.
Also, South China Morning Post (SCMP) said that Beijing has recently accepted the US invitation to visit Washington for trade negotiations, hopefully signing in for the phase-one deal. For this reason, China’s Vice Premier and chief trade negotiator Liu He will travel to the US next Saturday.
Oil prices have recently benefited amid a slew of declining inventory, rig count data from the US. Also supporting the energy benchmark could be the US-Middle East tension.
Given the absence of major data on the economic calendar, except for the US housing and consumer sentiment data, markets may carry the present trend towards the end of 2019.
Though, a market holiday on Wednesday will be followed by the Canadian Manufacturing PMI and could entertain momentum traders during the start of 2020.
Technical Analysis
October low surrounding 1.3042 and the yearly bottom near 1.3015 hold the key to pair’s fall to 1.3000 mark. On the upside, December 18 low of 1.3100 restricts short-term advances.
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