USDCAD range bound as decline in the Turkish Lira now seems to have come to a pause while bearish factors on Loonie’s end failed to boost US Greenback.
The USD/CAD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow trading band, around mid-1.3100’s which can also be viewed as resistance near three-week tops. The pair built on last week’s goodish rebound from 100-day SMA support and was being supported by the ongoing US Dollar bullish run, which remains underpinned by the global flight to safety amid mounting currency crisis in Turkey. A steep decline in the Turkish Lira now seems to have paused at least for the time being and a consolidating USD price action was seen leading to a range-bound/subdued price action through the early European session. Meanwhile, a weaker tone around crude oil prices also did little to revive demand for the commodity-linked currency – Loonie, with the USD price dynamics turning out to be an exclusive driver of the pair’s momentum at the start of a new trading week.
NAFTA Talks & Softer Crude Oil Price Action Weighs Down CAD
Meanwhile Canadian market continues to be hit with back to back news that adds bearish influence to Canadian Loonie. Last weekend it was Saudi Arabia, this weekend it’s Trump. Canada can’t catch a break in diplomatic relations. USD/CAD jumped at the open last week after Saudi Arabia recalled its ambassador and it continued higher when top officials ordered the divestiture of Canadian financial assets “at any cost”. Now Trump is threatening to tax autos if there’s no NAFTA deal. With the US dollar already sizzling, it won’t take much to spark a further rally in USD/CAD. While NAFTA deal is expected to come to a close, both sides of US border are still seemingly uncomfortable about outcome from deal as the very existence of Donald Trump as US President sparks uncertainty. Such a situation is caused due to the “America first” approach by President Trump who has been bullying allied countries since he came into power to come to an agreement in his terms on any particular deal/talks/agreement.
Today’s up-move could also be attributed to some follow-through technical buying, especially after Friday’s decisive move beyond 50-day SMA. In absence of any market-moving economic data, a follow-through positive momentum, towards testing a short-term descending trend-channel hurdle, now looks a distinct possibility. Immediate resistance is pegged just ahead of the 1.3200 handle, which if cleared would point to a near-term bullish breakout and pave the way for an extension of the positive momentum further towards 1.3270-75 supply zone. On the flip side strong support can be found around 1.3038 / 1.2975 price levels.