The USD/CAD pair was closed at 1.35636 after placing a high of 1.35943 and a low of 1.35117. Overall the movement of the USD/CAD pair remained bullish throughout the day. A day before, the USD/CAD pair surged after posting losses for the previous three consecutive days. The risk-off market mood due to the growing fears of the second wave of coronavirus and the gloomy outlook of the economy by Powell weakened the safe-haven greenback.
The news reporting increase in numbers of coronavirus infections in many states of the U.S. gave a push to the fears of the second wave of the virus. Besides, the renewed lockdown restrictions in Beijing after increased numbers of infection cases in a city enjoying no single instance of the virus from the past few weeks added in the fears of the second wave of the virus. On the other hand, the Federal Reserve Chairman, Jerome Powell increased the concerns about V-shaped global economic recovery after giving warning that recovery was unlikely until the public was confident that the virus could be contained. This uncertainty on the virus end confirmed that Banks should continue to maintain their monetary policy support to protect the economy from fall.
On the crude oil front, the rising tensions between China & India and North Korea and South Korea on their disputed borders weighed on Crude oil prices, and they dropped. Another factor adding in the decreased demand for crude oil was the stockpiles of the U.S., which were reported as 1.2M against 0.0M of expectations. An increased number of crude oil inventories in the U.S. indicated decreased demand for energy, and hence, WTI Crude oil suffered on Wednesday. WTI Crude oil prices fell to a low of 37.1$ per barrel and weighed on a commodity-linked currency- Loonie. The weak Canadian dollar underpinned the USD/CAD pair to post gains on Wednesday.
On the data front, the CPI for May from Canada was released at 17:30 GMT, which dropped to 0.3% from the expected 0.8% and weighed on CAD. The Common CPI for the year also fell to 1.4%from the expected 1.6% and weighed on CAD. However, the median CPI and Trimmed CPI came in line with the expectations of 1.9% and 1.7%. The Core CPI for May also came flat with expectations of -0.1% at 17:32 GMT. Poor than expected data from Canada also weighed on the Canadian dollar and pushed the pair USD/CAD higher.
Daily Technical Levels
Support Resistance
1.3519 1.3604
1.3472 1.3642
1.3434 1.3689
Pivot Point: 1.3557
On June 18, the USD/CAD pair continues trading sideways, maintaining the narrow trading range of 1.3665 - 1.35100. The traders seem to wait for the U.S. Jobless Claims and Philly Fed Manufacturing Data side to breakout. Weaker than expected data can drive a bearish breakout below 1.3523 level and lead Loonie towards 1.3450 and 1.3357 area. Alternatively, the hawkish tone can lead the pair towards 1.3660 level today. Good luck!