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USD/CAD remains on the road to recovery amid lack of fresh clues

  • Oil price slump added strength to USD/CAD recovery amid overall greenback strength.
  • Canadian CPI, Manufacturing Shipments and the US housing market statistics will be in focus for now.

With the global investors continue cheering the US Dollar (USD) strength, the USD/CAD pair recovers to 5-day high, at 1.3090, during early Wednesday.

The pair gained traction on Tuesday after upbeat prints of the US Retail Sales dimmed the charm of dovish Fedspeak. Also strengthening the momentum were the oil price slump and uncertainty surrounding the US-China trade deal.

Canada relies heavily on crude for it's export earnings and hence developments surrounding trade/energy have direct impacts on the Canadian Dollar (CAD).

WTI declined heavily after the US Secretary to State Mike Pompeo said that Iran showed readiness to talk. However, Iran rejected the claims afterward, as per the BBC, which doesn’t get major attention off-late.

Traders look forward to the June month Consumer Price Index (CPI) and Manufacturing Shipments from Canada for fresh impulse in addition to the US housing market indicators for the same month.

Canadian Manufacturing Shipments are likely to reverse previous -0.6% contraction with +1.6% rise but the CPI YoY is expected to soften to 2.0% from 2.4% prior. Further, Bank of Canada’s (BOC) core CPI also directs the pair moves and is likely to increase to 2.6% from 2.1% on a yearly format with MoM reading likely flashing 0.1% versus 0.4% earlier.

On the other hand, the US Housing Starts could weaken to 1.261 million from 1.269 million but Building Permits might rise to 1.300 million from upwardly revised 1.299 million prior.

Technical Analysis

21-day simple moving average (SMA) level of 1.3116 acts as nearby resistance for buyers to watch ahead of targeting monthly high close to 1.3145/50. Meanwhile, 1.3050, 1.3018 and 1.3000 can keep pleasing sellers during a fresh downpour.

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