USD/CAD extends pullback as WTI remains firm, Canadian CPI/FOMC minutes in the spotlight
|- USD/CAD seesaws near 200-day SMA amid WTI recovery.
- Trade/political headlines can offer intermediate moves ahead of Canadian inflation data, FOMC.
Having failed to hold monthly high drags the USD/CAD again to 200-day simple moving average (SMA) as it trades near 1.3315 during early Wednesday.
The pair seems to have take clues from the recent recovery of oil prices after the American Petroleum Institute’s (API) stockpile data registered surprise draw. Also adding strength to the energy prices were comments the US Secretary of State Mike Pompeo that signals escalation of geopolitical tension concerning Iran.
On the different page, the US-China trade deal uncertainty looms as the US President reiterates lack of readiness to do a deal while Secretary Pompeo expects no trade war by 2020. Furthermore, the Federal Reserve officials continue to advocate for the absence of the US recession.
Investors will now keep a tab on Canada’s Consumer Price Index (CPI) data for July ahead of the key Federal Open Market Committee (FOMC) minutes. The headline Canadian CPI is expected to soften to 1.7% from 2.0% on a YoY basis which in turn increases the odds for the Bank of Canada’s Core CPI to drop from 2.0%. Moving on, the FOMC minutes will be closely observed for catalysts that drove the US central bank towards a rate cut.
Technical Analysis
A daily closing below 200-day SMA level of 1.3310, also breaking 1.3300 round-figure, can fetch the quote to 1.3251/50 support-zone including August 19 low and August 12 high. On the flip side, a sustained run-up beyond 1.3350 becomes necessary for prices to aim for 1.3380 and June 18 high around 1.3430.
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