USD/CAD Trading Remains Slow Despite Positive Outlook
- US-China trade tensions still in center for investors
- Meeting between Trump and Xi Jinping could be delayed to December
- The Bank of Canada recently turned more “dovish”
The USD/CAD pair is trading this Thursday around 1.3180 level. According to the current market sentiment, the direction for USD/CAD remains neutral. Encouraging headlines correlated to the US-China trade relationship were published at the beginning of the week. Progress has been made in trade negotiations. According to the latest news, the meeting between Trump and Xi Jinping could be delayed until December. Investors and traders are still waiting for information about tariffs removal before they make any decision.
The trade war concerns continue
The US economy is still doing good in terms of growth. The US has released Nonfarm Payroll report last Friday, the country added 128K new jobs and this was above the market’s expectations. On the other side, the unemployment rate has reached 3.6%, but this was in line with expectations. The general view of the Canadian economy is quite positive. With that said, the Bank of Canada recently turned more “dovish”. Canada heavily depends on exports to the US and trade war concerns also represent the negative sentiment for the Canadian Dollar. In the short term, the USD/CAD can be pressured by the surge in oil prices. According to the fundamental analysis, the sentiment for USD/CAD remains “neutral”.
In the last two weeks, this pair has been trading”sideways”, the price has been moving from 1.310 to 1.320 most of the time. The USD/CAD is trading now below 1.320 level but the price has advanced recently above this level. This could be an indication that the price could advance even more and maybe reach 1.330 strong resistance.
Support and resistance levels are noted – 1.320 and 1.330 represent the important resistance levels. 1.310, 1.305 and 1.300 are the current support levels. According to the technical analysis, the direction for USD/CAD remains neutral. If the price breaks 1.300 strong support that would be a strong signal to sell. On the other side, if the price jumps again above 1.320 it would probably reach 1.323 level very soon, the next target could be located around 1.330.
Background noise and conclusion
The USD/CAD is trading currently around 1.318 level and according to the current market sentiment, the direction for USD/CAD remains neutral. The US dollar is highly sensitive to US-China trade relations currently and the US economy in general. On the other side, the Canadian dollar is so highly sensitive to crude oil. If crude oil rallies, that will quite often put downward pressure in this pair. According to analysts, the US has a moderate economic growth and the policymakers will probably not cut rates anymore soon. The general view of the Canadian economy is quite positive but the Bank of Canada recently turned more “dovish”.