USD/CAD Daily Price Forecast – USDCAD Rangebound Ahead of US NFP Data
The USDCAD pair was trading range bound yesterday with a majority of trading session seeing price momentum in favor of Canadian Dollar. As the price hit new 2019 highs earlier this week, the pair entered consolidative price move earlier yesterday and Crude oil price saw positive price action erasing declines from earlier this week. This helped Canadian Dollar pull the pair from weekly highs, however, there was a sharp change during American market hours as the pair resumed positive price action despite positive crude oil price in the broad market. The upside move was triggered as risk appetite in the global market taking a hit from the latest ECB update. Since the start of the week, various central banks including Bank of Canada displayed a dovish tone, but mixed price action in equity market hinted at some level of risk appetite among global investors.
Macro Data Outcome To Provide Directional Bias
This risk appetite was completely wiped out following ECB update which showed unexpectedly high dovish tone with no plans for a rate hike in 2019. As the EURO is considered leader among major global currencies, a sharp blow the currency was felt across the forex market with USD gaining momentum against all major global currency pairs. This helped USD gain strength despite CAD bulls receiving support from Crude oil price resulting in the pair scaling to 2019 highs during American market hours. Further, Crude oil price began declining in global market during early market hours and this helped USD bulls a relatively stronger grip on positive price action ahead of US macro data updates. However, investors held back from placing any major bets owing to caution ahead of US macro data update and this helped prevent sharp upside move and resulted in rangebound price action across the day.
Canadian Dollar is a commodity-linked currency and suffers whenever crude oil market suffers dovish price action. Crude oil price today fell sharp erasing all gains made in the previous session and then some. This caused CAD to lose little influence it gained over price action yesterday’s trading session. Investors now await the US and Canadian macro data update for directional cues before placing major bets. However, the pair is volatile as retail traders are active in hopes of taking short term profits during late-European and early-American market hours when both sides of the pair will see highly active economic calendar updates. Canadian calendar will see the release of the unemployment rate and Employment change update while the US calendar will see the release of Non-Farm Payroll, Building Permits, Average Hourly Earnings, and Unemployment rate update. US macro data is forecast to have dovish outcome while Canadian macro calendar is expected to have mixed outcome. While Canadian macro data outcome may have little impact on price action, positive US macro data outcome will help pair aim to test 1.35 handle while dovish outcome will push the pair back below 1.3400 handle. Post the short burst of activity following macro data updates, the pair is expected to resume range bound action based on directional bias obtained from macro data update as trading session comes to close for the week.
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This article was originally posted on FX Empire
