USD/CAD: Bears hold the reins amid commodity rally
- The US Dollar (USD) weakness joins strong crude prices to hold the Loonie pair near a 16-week low.
- Canadian Retail Sales, US PMIs on the spotlight.
Latest tensions between the US and Iran, not to forget likely tussle of the US and Saudi Arabia, added further weakness into the USD while strengthening oil prices side-by-side. As a result, the USD/CAD pair traders weak near the lowest levels since early March while clocking in 1.3173 during early Friday.
Iran’s complain of the unmanned US aircraft flying over its airspace to the United Nations (UN) seems to have played its role in a case where the US Federal Aviation Administration (FAA) issued a notice on Friday, prohibiting flying in an area over the Strait of Hormuz and the Gulf of Oman.
It was also reported by the New York Times that the US President Donald Trump initially approved strikes on Iran but then abruptly called it off later on.
Elsewhere, UN’s report that claims to have proof of the Saudi Arabian Prince Mohammed bin Salman’s hand in the murder of the US journalist Jamal Khashoggi is likely to add further geopolitical pressure into the markets.
While rising market uncertainty amid a recently dovish statement from the US Federal Reserve weakens the greenback, the Canadian Dollar (CAD) benefits from the oil’s rise over supply crunch forecast due to the geopolitical factors.
It should also be noted that crude is Canada’s largest export item.
Moving on, June month Markit Purchasing Manager Index (PMI) from the US and Canadian Retail Sales are likely to offer additional direction to the price momentum. While the Markit Manufacturing PMI is expected to soften to 50.4 from 50.5, its services counterpart could inch up to 51 from 50.9 previous. On the other hand, Canadian Retail Sales (MoM) growth bears the consensus of 0.2% increase versus 1.1% prior while the Retail Sales ex Autos, mostly known as the Core Retail Sales, are likely to have increased 0.3% from 1.7% during April month.
A sustained break below 14-month old support-line, at 1.3177 now, can drag the prices down to 50% Fibonacci retracement of April – December 2018 period, near 1.3100. However, oversold levels of 14-day relative strength index (RSI) signal brighter chances of the pair’s pullback towards 1.3150 and then to 200-day simple moving average (SMA) level of 1.3280.
This article is published only for general use basic informatory purposes and should not be considered or depended on as a financial or investment advice. Investors should make sure that they understand the risks and seek independent financial advice at all times. CFDS ARE COMPLEX INSTRUMENTS AND COME WITH A HIGH RISK OF LOSING MONEY RAPIDLY DUE TO LEVERAGE.