- New U.S. – Canada – Mexico trade pact boosts the CAD on Monday.
- US Dollar Index stays above the 95 handle.
- WTI continues to trade above $73.
The USD/CAD pair opened the day with a bearish gap as the loonie gathered strength on news of the U.S., Canada and Mexico reaching a new trade deal. After dropping below the 1.28 mark and touching its lowest level since late May at 1.2787, the pair recovered a portion of its daily losses and was last seen trading at 1.2825, where it was still down 0.65% on the day.
Markets are now waiting on the details of the trade agreement. Canadian Prime Minister Trudeau and the U.S. President Donald Trump are both scheduled to deliver their remarks on this development later in the session.
Today’s data from Canada showed that the business activity in the manufacturing sector expanded at its slowest pace since December of 2017 with the Markit PMI in September falling to 54.8 from 56.8 in August. On the other hand, Markit final September Manufacturing PMI in the U.S. came in at 55.6 to match both the previous estimate and market expectations. A separate report released by the ISM, however, revealed that the manufacturing sector lost some momentum in September. Despite the mixed data, the US Dollar Index preserved its bullish momentum that it gathered in the second half of the previous week and stayed in the positive territory above 95. At the moment, the index is up 0.12% on the day at 95.25.
Meanwhile, crude oil prices are supporting the commodity-sensitive loonie as well with the barrel of West Texas Intermediate trading with modest gains above $73.50.
Technical levels to consider
The next support for the pair could be seen at 1.2730 (May 11 low) ahead of 1.2690 (Apr. 9 low) and 1.2630 (Apr. 20 low). On the upside, resistances are located at 1.2950 (200-DMA), 1.3000 (psychological level) and 1.3030 (50-DMA).
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