The USD/CAD pair was closed at 1.37491 after placing a high of 1.38222 and a low of 1.37277. Overall the movement of USD/CAD remained bearish throughout the day. The pair USD/CAD extended its previous day's losses on Wednesday and reached near 1.37200 level, the lowest level since 12th March. After falling to its multi-week low level, the pair rebounded in the second half of the day.
The selling pressure of the crude oil prices on Wednesday weighed on commodity-linked Loonie. The heightened tensions between the U.S. and China pushed crude oil prices lower despite easing energy demand across the globe. The WTI Crude oil prices fell sharply to $31.78 per barrel on Wednesday after Washington said that the U.S. administration no longer considers Hong Kong as an autonomous territory from China. It means the U.S. sanctions and tariffs would extend to Hong Kong also. Crude Oil prices after this news on the back of escalated tussles between the world's two biggest economies fell around 5.2% daily basis.
This weighed on the Canadian Dollar, which is directly associated with the Crude Oil prices. The Loonie currency was also pressured by the comments from the Governor of Bank of Canada on Wednesday. Poloz said that if the fiscal policy was not utilized properly, then extreme conditions could be faced by the Canadian economy, which will ultimately lead towards negative interest rates.
Bank of Canada stated that it could provide more monetary stimulus if needed. BoC maintained its inflation target at 2% and said the near term challenge for the central bank was to avoid deflation. These dovish comments from Poloz also exerted negative pressure on the Canadian Dollar and made it weak against the U.S. dollar on Wednesday. However, the market seemed to ignore the Canadian dollar weakness across the board because the pair USD/CAD continued showing losses.
On the other hand, the U.S. Treasury yields fell, and U.S. stocks underperformed along with U.S. Dollar Index, which moved to its lowest level in more than three weeks at 98.72on Wednesday, exerted high pressure on USD/CAD prices and dragged the pair below 1.373 level.
Daily Technical Levels
Support Resistance
1.3711 1.3809
1.3669 1.3865
1.3613 1.3907
Pivot Point: 1.3767
Technically, the USD/CAD prices are trading sideways, mostly over an immediate support level of 1.3733 level. Sellers seem to loom below 1.3733 area as a violation of this level may extend selling until the next support level of 1.3650 level while resistance continues to hold around 1.3800 level. The 50 EMA and RSI are both suggesting selling in the USD/CAD pair today. Let's wait for the U.S. GDP figures later today as this may help drive breakouts in the market. Good luck!