USD/CAD stays under pressure below 1.3000 with eyes on trade headlines, WTI
- USD/CAD struggles to justify US-China trade optimism, broad USD recovery and downbeat Canadian data.
- Holiday mood at major bourses, Japan off and a lack of WTI strength will weigh on the Loonie.
- US data, FOMC minutes and trade/political news can offer fresh impulse.
USD/CAD trades around 1.2985 amid early Friday. That said, the quote has recently been struggling near multi-month low as broad US dollar (USD) recovery confronts the underlying strength of the Canadian dollar (CAD).
While the recent USD strength has more to do with the year-start consolidation and sparse trading conditions, mixed economics from the US troubled the traders the previous day. On the contrary, Canadian Manufacturing PMI also slipped to a four-month low.
Even so, the initial optimism surrounding the US-China signing of the phase-one deal helped the CAD. Also supporting the Loonie were likely improvement in Canada’s key export item, crude oil, amid rising geopolitical tension between the US and the Middle East as well as depletion in the US inventories and rig counts.
Recently, The Hill came out with the doubts over the phase-two talks as the key issues are still left for discussions. Also joining the same could be China’s dislike for the US interference with internal issues related to Taiwan, Hong Kong and Xinjiang.
Looking forward, traders will keep eyes on the US-China trade headlines and anything that affects WTI and oil prices. On the economic calendar, the US ISM Manufacturing PMI and FOMC minutes could play their roles.
Technical Analysis
Multiple Doji candlestick formations around the lows show traders’ indecision and hence a wait for either a fresh low beneath 1.2943 or rise above October bottom surrounding 1.3040 should be ideal while trading.