USD/CAD: technical levels and fundamentals

General overview

In the Tokyo morning, Loonie reverted its recent bullish bias and sent prices towards the sturdy support at 1.3350.  In the course of the European session, the downward pressure eased and helped USD to rise higher.

Fundamentals

Yesterday we heard BoC’s Governor S. Poloz speaking at Durham College. He sounded a bit dovish and cautious. Mr. Poloz noted in his speech that Canada’ economic growth prospects are still unclear to the Bank of England as Trump administration’s intentions with regard trade deal with Canada are still unknown. Although President Trump is determined to target Mexico, there is still great uncertainty over the NAFTA deal and its consequences for Canada.  Also, we received some comments on the housing prices from the BoC’s Governor. It was said that recent upsurge in housing prices is not driven by fundamental demand.

USD moved higher overnight as investors have become more optimistic about the Trump’s ability to enact pro-growth policies. Fed’s speakers (George, Kaplan, and Fischer), Chair Yellen backed expectation for more US interest rate hikes and provided an additional boost for the currency overnight.  

Tokyo’s revival of oil prices was positive for the loonie. Brent oil futures surged to $51.76. WTI futures were also higher in the Asian session. The optimism that an OPEC-led production deal cut will be extended took its toll. USD/CAD dropped to the important level at 1.3350 (50-H4 MA). Today’s focus will be on the US crude oil inventories data. If the release posts another buildup in US crude stockpiles, the loonie’s reaction will be negative.

Towards the end of the week, we will be waiting for US and Canadian economic growth figures coming on Thursday and Friday respectively. A strong Canadian GDP release will certainly be favorable for CAD’s valuation.

Technical levels

USD/CAD will probably continue its roundabout movement within the Ichimoku cloud on the H4 timeframe. A break of the upper border (1.3380) will open the way towards the next immediate resistance at 1.3415. On the downside, the main supports can be found at 1.3286 (100-day MA), 1.3350 and 1.3280 (the upper border of Ichimoku cloud on the daily timeframe).