USD/CAD: Sellers catch a breath as WTI carries pullback, risk tone improves

  • USD/CAD stops further declines amid mixed trade/political news, WTI recovery.
  • The broad US Dollar (USD) strength becomes an additional catalyst to watch.

USD/CAD sellers are catching a breath around 100-day exponential moving average (EMA) as the pair traders near 1.3275 during early Monday.

The Loonie traders seem to be troubled between mixed signals from the upbeat WTI prices and challenges to the US-China trade deal, not to forget about China’s latest measures towards a free-floating currency system.

The US President Donald Trump’s recent media remarks dampen recession risk and further escalates market risk-on, which in turn can be witnessed in rising global treasury yields. The US 10-year treasury yield is on its run-up to 4 basis points (bps) to 1.58% by the press time.

It should also be noted that the People’s Bank of China (PBOC) recently announced measures to alter their bank loan rates and some additional modifications to the policies that govern them.

Prices of Oil, Canada’s largest export item, also extend Friday’s recovery as rising optimism propels the energy prices.

Although pessimism surrounding a trade deal between the US and China, coupled with global recession fears, can keep exerting downside pressure on the overall market sentiment, the US Dollar (USD) strength will be closely observed ahead of this week’s key events like latest monetary policy meeting minutes from the US Federal Reserve and global policymakers’ speech at the Jackson Home Symposium.

Technical Analysis

100-day EMA around 1.3250, closely followed by the 200-day EMA level of 1.3240, limits the quote’s near-term declines towards 1.3200 round-figure while 1.3340/45 seems to be the immediately strong upside resistance.

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