USD/CAD: Bears hold the reins amid commodity rally

The US Dollar (USD) weakness joins strong crude prices to hold the Loonie pair near a 16-week low.
Canadian Retail Sales, US PMIs on the spotlight.

Anil Panchal FXStreet

Latest tensions between the US and Iran, not to forget likely tussle of the US and Saudi Arabia, added further weakness into the USD while strengthening oil prices side-by-side. As a result, the USD/CAD pair traders weak near the lowest levels since early March while clocking in 1.3173 during early Friday.

Iran’s complain of the unmanned US aircraft flying over its airspace to the United Nations (UN) seems to have played its role in a case where the US Federal Aviation Administration (FAA) issued a notice on Friday, prohibiting flying in an area over the Strait of Hormuz and the Gulf of Oman.

It was also reported by the New York Times that the US President Donald Trump initially approved strikes on Iran but then abruptly called it off later on.

Elsewhere, UN’s report that claims to have proof of the Saudi Arabian Prince Mohammed bin Salman’s hand in the murder of the US journalist Jamal Khashoggi is likely to add further geopolitical pressure into the markets.

While rising market uncertainty amid a recently dovish statement from the US Federal Reserve weakens the greenback, the Canadian Dollar (CAD) benefits from the oil’s rise over supply crunch forecast due to the geopolitical factors.

It should also be noted that crude is Canada’s largest export item.

Moving on, June month Markit Purchasing Manager Index (PMI) from the US and Canadian Retail Sales are likely to offer additional direction to the price momentum. While the Markit Manufacturing PMI is expected to soften to 50.4 from 50.5, its services counterpart could inch up to 51 from 50.9 previous. On the other hand, Canadian Retail Sales (MoM) growth bears the consensus of 0.2% increase versus 1.1% prior while the Retail Sales ex Autos, mostly known as the Core Retail Sales, are likely to have increased 0.3% from 1.7% during April month.

Technical Analysis

A sustained break below 14-month old support-line, at 1.3177 now, can drag the prices down to 50% Fibonacci retracement of April – December 2018 period, near 1.3100. However, oversold levels of 14-day relative strength index (RSI) signal brighter chances of the pair’s pullback towards 1.3150 and then to 200-day simple moving average (SMA) level of 1.3280.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

EUR/USD recedes to daily lows near 1.1850

EUR/USD keeps its bearish momentum well in place, slipping back to the area of 1.1850 to hit daily lows on Monday. The pair’s continuation of the leg lower comes amid decent gains in the US Dollar in a context of scarce volatility and thin trade conditions due to the inactivity in the US markets.

GBP/USD resumes the downtrend, back to the low-1.3600s

GBP/USD rapidly leaves behind Friday’s decent advance, refocusing on the downside and retreating to the 1.3630 region at the beginning of the week. In the meantime, the British Pound is expected to remain under the microscope ahead of the release of the key UK labour market report on Tuesday.

Gold looks inconclusive around $5,000

Gold partially fades Friday’s strong recovery, orbiting around the key $5,000 region per troy ounce in a context of humble gains in the Greenback on Monday. Additing to the vacillating mood, trade conditions remain thin amid the observance of the Presidents Day holiday in the US.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.