USD/CAD stays under pressure ahead of Canadian election

• USD/CAD seesaws near the lowest since July-end.
• Canadian Federal Election is less likely to form any majority government.
• Tuesday’s BOC Business Outlook Survey will be the key.

With the trade positive headlines gaining the support of the upbeat Canadian fundamentals, USD/CAD remains on the back foot around 1.3130 during early Monday, the election-day for Canada.

Ever since the Canadian data started coming in positive, odds concerning the Bank of Canada (BOC) to shift from broad easy money policy at various central banks kept increasing. Adding to the sentiment is recently upbeat trade headlines from the South China Morning Post (SCMP) that quotes China’s Vice Premier Liu He while marking “concrete progress” on the trade war front between the United States (US) and China.

Global investors seem to pay a little heed to the uncertainty surrounding Brexit as the macro risk barometer the US 10-year treasury yield stays modestly changed to 1.75% by the press time.

Being the Federal Election-day in Canada, coupled with an absence of major data, investors are less likely to look any farther than this for fresh impulse. “Based upon polling composites, the election probabilities suggest low odds of a majority, and similar odds attached to either a Liberal or Conservative minority government. Uncertainty surrounding the platforms and fiscal effects could have markets guardedly positioned toward the election outcome itself and it could take a while for the fuller effects to be priced,” says Scotia Bank.

Following the election results, quarterly Business Outlook Survey from the Bank of Canada (BOC) will be closely observed as the same will provide details to foresee next week’s BOC move.

Technical Analysis

Considering oversold conditions of the 14-bar Relative Strength Index (RSI), the pair seems to revisit 1.3200 round-figure on the upside break of 1.3170. However, 1.3100-1.3090 support-zone, comprising multiple lows marked during mid-July, becomes the key for the sellers as a break of which could recall 1.3040 and 1.3015 on the chart.