USD/CAD pulls back from 50-DMA amid trade-positive headlines
|- USD/CAD declines from 50-DMA as the US and China pave the way for a good start to October trade talks.
- US CPI will be the key to watch while Canadian housing data will also be observed.
- Trade/political headlines will hold their importance.
Given the recent trade positive headlines from the US and China, the USD/CAD stays below 50-DMA as it trades around 1.3185 during early Thursday.
The pair recently rose to the 50-day simple moving average (DMA) level after oil prices, Canada’s main export, dropped on expectations of receding tension between the US and Iran after the exit/firing of the White House National Security Adviser John Bolton.
However, the momentum couldn’t clear the short-term resistance as China released a list of the US goods that will be exempted from the tariffs. Extending the optimism were latest developments showing the Chinese Premier holds a positive attitude to resolve the US-China trade tussle, Taiwan agreeing to import major farm products from the US and the US President Donald Trump giving a 15-day leeway to the $250 billion worth of Chinese goods before levying extra tariffs on them.
Investors will now closely observe the economic calendar as it carries the US inflation number for August month. Ahead of the event, Westpac says, “US August CPI is seen up 0.1%mth, 1.8%yr overall, 0.2%mth, 2.3%yr ex-food and energy. The Fed regards this series as overstating inflation, so instead targets and forecasts the PCE deflator, but CPI still moves markets at times.”
In addition to the US CPI, Canada’s July month New Housing Price Index will also be up for publishing. The housing market data is expected to improve from -0.1% prior to 0.0% in July month.
Technical Analysis
Unless breaking 50-DMA level of 1.3200, which holds the key to pair’s run-up towards 1.3230 and 1.3250, prices are likely to revisit 1.3145/35 area including latest lows and early-July highs.
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