- USD/CAD again aims to confront a multi-month-old falling resistance line as US-China nears the phase-one of the trade deal.
- Trade optimism plays a positive role in export-oriented economies.
- WTI stays sluggish amid few catalysts, broad support for the production cuts and strong USD.
Given the recently positive trade headlines from the United States (US) and China, USD/CAD gears up for the third straight winning streak. The quote takes the bids to 1.3310 during the initial trading session on Tuesday.
Not only Xinhua’s news story citing the US-China consensus on solving trade issues but upbeat comments from the US and Chinese officials also propelled the market’s risk-on sentiment off-late. China’s Vice Premier Liu He was said to be on a phone call with the US Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer during early Asian session.
However, uncertainty surrounding the second round of trade talks, popularly known as phase-two, keeps the bulls cautiously optimistic.
As a result, the US 10-year treasury yields takes rounds to 1.76% while S&P 500 Futures keep it modestly changed to 3,133 by the press time.
The Loonie pair earlier benefited from the weakness of oil prices. The WTI stayed sluggish on Monday amid a lack of major catalysts and a broadly strong US dollar (USD) negatively affecting the commodity basket.
It’s worth mentioning that the US Federal Reserve (Fed) Chairman Jerome Powell fails to offer any meaningful direction to the future policy moves while speaking at the Providence Chamber of Commerce Annual Meeting in Rhode Island. He said that the Fed would 'respond accordingly' if developments cause a material reassessment of economic outlook. The Fed Chair further mentioned that current monetary policy likely to remain appropriate as long as economic data is consistent with moderate growth.
Investors will now look towards the US economic data and comments from the Fed Governor Lael Brainard for further clues. “The consensus expects consumer confidence to improve modestly in November to 127.0 from 125.9 before. If confirmed, the Conference Board's measure would remain at healthy levels, which would be positive for the prospects of private spending. Separately, new home sales likely advanced marginally in October (+0.9% to 707k), continuing with the momentum in the housing sector on the back of low mortgage rates and a resilient labor market. Lastly, Governor Lael Brainard will offer an update regarding the Fed's Framework review at 1:00 PM EST. The Governor may also take the opportunity to offer her latest views on the economy and the current stance of monetary policy,” says TD Securities.
Technical Analysis
Buyers will look for entry beyond a downward sloping trend line since June 18, at 1.3330, until then 1.3270 can act as immediate key support.
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