- USD/CAD extends the previous day’s losses amid broad risk-off supporting the oil prices.
- The latest US dollar weakness and upbeat Canadian data have also favored sellers.
- The intermediate US/Canada data to track, together with geopolitical headlines, ahead of Friday’s key jobs report.
USD/CAD keeps the losses while declining to 1.2960 during early Tuesday. The pair recently weighed down by the overall US dollar (USD) weakness and better than expected Canada data. Also supporting the Bears were geopolitical risks emanating from the Middle East that increase the odds of the US-Iran war and a lift in oil prices which are the key to the Canadian economy.
The USD dropped heavily at the week’s start as receding odds of the US-Iran war and the phase-one deal update.
On the contrary, better than forecast prints of Canada’s Raw Material Price Index and Industrial Production Price have helped the Canadian dollar (CAD) to regain its strength after multiple days of sluggish trading.
Even so, the US-Iran terms aren’t back to normal as the Trump administration recently canceled visas of Iranian Foreign Minister who was to speak at the United Nations (UN) about the US killing of its top military personnel. In doing so, the US “violates a 1947 agreement with the U.N. that the U.S. allow foreign officials into the country for UN affairs,” says the Washington Post. Also, speculations that the US military forces will return from Iraq were also turned down by the US officials, as per the HuffPost.
With this, market players are mostly waiting for the fresh impulse from either the US or Iran. However, overall risk aversion stays on the card considering the Middle East’s dislike for the West. Portraying the same, the US 10-year treasury yields seesaw near 1.81% whereas the S&P 500 Futures also remain +0.10% to 3,247 by the press time.
Traders will now focus on the economic calendar that carries Canadian International Merchandise Trade, Ivey Purchasing Managers Index and the US ISM Non-Manufacturing PMI. It should, however, be noted that the major attention will be on Friday’s monthly employment releases from the US and Canada that were postponed from the last Friday to this one due to the New Year holidays.
Technical Analysis
Lows marked in July and October, near 1.3015 and 1.3045, seem to restrict the pair’s near-term upside.
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