The Loonie is in a rally mode this morning and it is continuing to appreciate, as seen over the last few days. The mixed data in the US is helping the Loonie to get some buying pressure. The Loonie traded flat in yesterday’s trading session right after the gross domestic product year to year came in at 1.7 percent versus the expected 1.6 percent. However, this morning the manufacturing PMI numbers came in at 53, when the expected numbers were 53.6.
For now, the “risk on” mode of the FX markets are giving the benefit of the doubt to the US-China negotiations, where Trump has made tremendous progress, but it does not mean there is a deal. Trump also said that Huawei was not discussed in the talks, but it will be.
Technically speaking, the USD/CAD is still on a long-term uptrend; however, in the short-term, it has a strong momentum to the downside. At the moment it is trading at 1.3110, which is a new 85 day low. Probably the best-case scenario for the Loonie in the short-term is for the USD/CAD to fall towards 1.3075. If that level is broken for whatever reason today, the uptrend of the USD/CAD might change to a downtrend (stronger Loonie). It is probably too soon to expect that to happen though.