- USD/CAD stays close to 13-day low amid recent optimism surrounding Canada.
- Upbeat Oil prices, welcome economics at Canada and BOC’s positive tone jostled with the USD’s broad weakness.
- Monthly employment data from the US and Canada will be in the spotlight while trade/political headlines could offer intermediate moves.
USD/CAD declines to 1.3175 amid Friday’s Asian session. The pair dropped to the lowest since November 19 on the previous day as prices of oil, Canada’s biggest export, rose further and also because the Canadian economics came out strong.
Be it Bank of Canada’s (BOC) optimism surrounding the economic resilience or lesser than expected trade deficit and activity numbers from Canada, Canadian fundamentals are quite strong off-late. Also increasing the fundamental strength is oil’s rally on the back of expectations of further supply cut and depleting inventories.
Further, Reuters’ news that Canadian Prime Minister (PM) Justin Trudeau is nearing a fiscal plan including tax cuts, investments in housing & infrastructure added strength to loonie bears.
On the other hand, the United States (US) is witnessing a period of pessimism where traders give less care to the key diplomats’ comments to show US-China trade progress amid contrasting media reports. The US economics are also downbeat even if the latest lot, including Factory Orders, managed to stay positive.
The recent headline from FBN quotes the US National Security Adviser Robert C. O’Brien while he said that the US and China are close to the phase-one deal. However, no market reaction to the same could be witnessed.
Investors are all gearing up for the key November month employment data from the US and Canada. While the headline US Nonfarm Payrolls, expected 180K versus 128K, will be in the spotlight, Canada’s Net Change in Employment, likely +10K against -1.8K prior, could also gain market attention. Also, the Organization of the Petroleum Exporting Countries (OPEC) members will meet during the second day of the scheduled two-day gatherings in Vienna to discuss their recently announced production cut of 500K. If the decision is passed and agreed with Russia and other allies, known as OPEC+, that could help the oil prices rise further.
Technical Analysis
While 200-day Exponential Moving Average (EMA) near 1.3230 limits the pair’s upside, September month low surrounding 1.3130 restrict its short-term declines.
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