- The US Dollar regains some composture and climbs against the Canadian Dollar.
- Canadian and US S&P Global Manufacturing PMIs for December would update the current state of factory activity.
- USD/CAD Price Analysis: Range-bound, unable to break above/below the 1.35/1.36 range.
The USD/CAD bounces off nearby the 50-day Exponential Moving Average (EMA) at 1.3532 and rises toward the 20-day EMA, during the first trading day of 2023 in the North American session, amidst thin liquidity conditions, as most markets remain closed on the observance of new year’s eve. At the time of typing, the USD/CAD is trading at 1.3573 after hitting a low of 1.3535.
European equities are trading on a higher note in low-volume conditions. The US Dollar Index, a gauge of the buck’s value against a basket of six currencies, advances 0.14% to 103.63, off six-month lows hit during the last week at 103.38. the lack of US and Canadian economic data keeps traders leaning on market mood and technicals.
Ahead of the week, Tuesday’s economic docket will feature the S&P Global Manufacturing PMIs for both countries, with Canada’s PMI expected to drop to 49.2, below the previous month’s reading of 49.6. Concerning the US, the PMI is estimated to stay unchanged compared to November’s 46.2 reading. Meanwhile, the ISM Manufacturing PMI reading for Wednesday is expected to further contract below the 49.0 mark, increasing the odds of a recession in the United States. Additional to the ISM report, the US docket will release December’s Federal Reserve (Fed) last meeting minutes, which would shed some light regardings the 2023 monetary policy overview.
USD/CAD Price Analysis: Technical outlook
From a daily chart perspective, the USD/CAD remains within familiar technical levels, unable to crack the bottom/top of the 1.3500/1.3600 range, capped by the 20 and 50-day EMAs. Oscillators like the Relative Strength Index (RSI) and the Rate of Change (RoC) exited from the bearish territory, opening the door for further USD/CAD upside. However, until the USD/CAD pair decisively breaks above 1.3600, that could open the door toward 1.3700. On the flip side, if the USD/CAD tumbles below 1.3500, that could pave the way for fresh four-week lows below 1.3484.
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