The USD/CAD pair quickly reversed a dip to sub-1.3600 level and moved back within striking distance of 19-month tops set in the previous session. After a relatively subdued/range-bound price-action, the pair picked up the pace during the early North-American session and the latest leg of sudden up-move could be solely attributed to a modest US Dollar rebound.This coupled with a slight retracement in crude oil prices undermined the commodity-linked currency – Loonie. Meanwhile the partial US government shutdown helped loonie limit its losses despite US Greenback’s rebound. As of writing this article, USDCAD pair is trading flat at 1.3635 down by 0.04% on the day.
Weak Crude Oil Price Aided Dollar’s Recovery Against Loonie
On the release front, there are no Canadian releases. In the U.S., today’s key event is Chicago PMI, which is expected to slip to 61.4 in December, down from 66.4 a month ago. The struggling Canadian dollar managed to hold onto its own this week, as the Christmas break gave the currency a badly-needed respite. The Canadian dollar has posted five straight weekly losses until Christmas week, and there’s a strong likelihood that the downward spiral will continue into January. There was a positive development in the U.S- China trade war, following reports on Wednesday that a U.S. delegation would travel to China to hold talks in the first week of January.
However trade war tension escalated once again as news hit market that US plans to enforce a ban on use of Huwaei & ZTE products in US industries which is also hurting CAD & other risky assets. When looking from technical perspective, on a sustained move beyond the 1.3660 immediate hurdle the pair is likely to aim towards reclaiming the 1.3700 handle for the first time since mid-May 2017. On the flip side, the 1.3600-1.3590 region now seems to have emerged as immediate support, which if broken might accelerate the corrective slide towards 1.3565-60 intermediate support en-route the key 1.3500 psychological mark.
This article was originally posted on FX Empire
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