“¢ Escalating US-China trade tensions/weaker US bond yields keep USD bulls on the defensive.
“¢ A goodish rebound in oil prices provide a minor boost to Loonie and add to the pressure.
The USD/CAD pair extended its steady retreat from levels beyond the 1.3200 handle and is currently placed at session lows, around the 1.3165-60 region.
Against the backdrop of escalating US-China trade tensions, weaker US Treasury bond yields kept the US Dollar bulls on the defensive and did little to assist the pair to build on last week’s strong upsurge to the highest level since late-June 2017.
Adding to this, a goodish rebound in crude oil prices underpinned demand for the commodity-linked currency – Loonie and further collaborated to the pair’s latest leg of decline since the early European session. The latest news that OPEC will discuss output hike of 300k to 600k bpd as against 1 million bpd anticipated helped ease the prevailing bearish sentiment around oil markets.
The pull-back, however, has been shallow and remains cushioned by last week’s hawkish Fed rate hike, stronger incoming US economic data and stalled NAFTA talks. Hence, any meaningful retracement is likely to be short-lived and attract fresh buying near a short-term ascending trend-line resistance break-point, now turned support, near the 1.3100 round figure mark.
In absence of any major market moving economic releases, the USD/oil price dynamics might continue to influence the price-action ahead of speeches by influential FOMC members – Atlanta Fed President Raphael Bostic and San Francisco Fed President John Williams. This week’s key focus would be on the latest Canadian inflation figures, due on Friday.
Technical levels to watch
Immediate support is pegged near the 1.3140 region and is followed by the 1.3100 handle, below which the corrective slide could further get extended towards 1.3045-40 support area.
On the flip side, the 1.3200 handle now seems to have emerged as an immediate hurdle, which if cleared could assist the pair to aim towards reclaiming the 1.3300 mark with some intermediate resistance near the 1.3265 area.
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