USD/CAD searches for direction around multi-month low, China data awaited

Following its drop to multi-month low, USD/CAD remains on the back foot while taking rounds to 1.3133 amid early Friday.

The recent absence of fresh catalysts seems to have contributed to the pair’s extension of previous moves. However, sellers seem cautious ahead of China’s key statistics.

Prices nosedived on Thursday after Canada’s upbeat economics confronted with the United States’ (US) disappointing data and trade positive headlines. It should also be noted that the previous rise in Crude prices, Canada’s main export, could have also contributed to the pair’s declines.

Looking at the consensus, China’s third-quarter (Q3) Gross Domestic Product (GDP) is likely weakened to 6.1% from 6.2% on a YoY basis and also expected to soften to 1.5% from 1.6% on a QoQ format. Though, Retail Sales and Industrial Production (IP) seem to have bucked the trend with forecasts favoring 7.8% and 5.0% levels versus 7.5% and 4.4% respective priors.

Given China’s key status for the commodity-linked currencies, likely improvement in data might extend the Loonie pair further towards the south. However, US-China trade noise and a lack of momentum in Crude Oil could restrict the downpour.

Technical Analysis

Sustained trading below 1.3130 could drag prices to 1.3100/3095 area including mid-July tops. However, buyers are likely staying away unless the one-week-old falling trend line, at 1.3192 breaks.