The Loonie trades sideways after a sour day for the FX markets
Wednesday 15 May, 2019
Daily Currency UpdateCAD - Canadian DollarThe Loonie trades sideways after weakening in yesterday’s trading session. The Loonie followed the ongoing trade dispute between the US and China, which was the most significant factor behind the drop of the Loonie. For obvious reasons, now the biggest concern for market participants is that not reaching an agreement between the US and China could endanger the chances of the USMCA as it awaits approval. Tomorrow though, the USD/CAD should have more influence from economic fundamentals when the consumer price index is released at 8:30 EST, the expected number is 2 percent. Technically speaking, the USD/CAD pair continues to trade in a range, testing a significant area of resistance between 1.3475 and 1.3515. This area has been tested since April 24th. The most interesting issue is that the US dollar index failed to make higher highs (which has downside pressure on the USD/CAD), but, at the same time, crude oil is weakening plus there is a “risk off” environment in the global fx market (which has upside pressure on the USD/CAD). It will be essential to see how the USD/CAD pair trades closer to the lower bound as well. The current support that was tested only twice in the last weeks was around 1.3375. Once the USD/CAD pair goes outside the range of 1.3375 and 1.3515, it might pick a direction.
Key MoversIt is another negative day for the British Pound. The Cable had been trading between 1.2950 and 1.3000; however, the GBP/USD pair is trading at 1.2912 at the time of this writing. The cross-party talks between the Conservatives and Labour appear to be going nowhere with pressure building on PM Theresa May from her backbenchers to pull out of the discussions and put in place a clear road map for her departure. The idea of a Customs Union with the EU (albeit only a temporary one) had been propping up the Sterling. However, this idea is anathema to hardcore Brexiteers and the chances of it happening to appear to be fading, so it seems the saga is going to rumble on for some time yet forcing the UK into taking part in next weeks EU parliamentary elections.
- USD/CAD: 1.3425 - 1.3500 ▼
- EUR/CAD: 1.5063 - 1.5147 ▼
- GBP/CAD: 1.7353 - 1.7405 ▼
- AUD/CAD: 0.9338 - 0.9360 ▼
- NZD/CAD: 0.8835 - 0.8875 ▼