USD/CAD snaps two-day losing streak as US dollar gains beat WTI recovery
|- USD/CAD justifies the previous day’s pullback from 1.3270.
- Greenback keeps the throne amid mixed sentiment, WTI ignores API data.
- US CPI will decorate the calendar, risk catalysts can entertain traders as well.
USD/CAD keeps the early-Asian recovery gains while trading around 1.3330, up 0.28% on a day, ahead of Wednesday’s European session. Amid a lack of domestic catalysts and the market’s emphasis on the US dollar gains, the loonie pair fails to take clues from the recent recovery in WTI, Canada’s biggest export item.
The American currency recovers from more than two year low amid hopes of US stimulus and vaccine news. US dollar index (DXY) prints four-day winning streak while taking the bids near 93.85, up 0.21% on a day, by the press time. Even if American Congress hasn’t yet started discussing the coronavirus (COVID-19) relief package, markets stay upbeat amid expectations that President Donald Trump will conquer any barriers as he recently did with executive orders for unemployment benefits. Talking about the vaccine, the Republican Leader Trump cited a deal with Moderna to mark his efforts to overcome the pandemic.
On the contrary, WTI fails to respect weekly inventory data from the private data provider the American Petroleum Institute’s (API). As per the latest upside, API Weekly Crude Oil Stock eased the previous declines in inventories while flashing a draw of -4.4M during the week ending on August 07. The reason could be traced from the market’s concerns that the US and China’s phase one deal is still on the table and can confront the virus-led economic slowdown. After yesterday’s upbeat comments from the People’s Bank of China’s (PBOC) Governor Yi Gang, China’s Vice Foreign Minister showed readiness to keep the trade talks on the table.
Elsewhere, RBNZ’s QE fails to derail market sentiment ahead of the US Consumer Price Index (CPI) data for July. The headlines inflation is expected to recover from 0.6% prior to 0.8% but the CPI ex Food & Energy (YoY) may recede from 1.2% to 1.1% during the reported month.
Other than the US CPI, traders will also keep eyes on the US-China trade news, virus updates and news on the US aid package for further direction.
Technical analysis
Bearish MACD and five weeks of continuous decline favor the USD/CAD bears. As a result, a confluence of 200-week SMA and an ascending trend line from February 2018, around 1.3175/70 become the landmark for traders. On the contrary, any pullback will be considered ephemeral unless crossing a downward sloping trend line from March high, at 1.3430 now.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.