The USDCAD pair yesterday closed on dovish note owing to the dovish US Fed forward guidance data. During North American market hours yesterday, the two-day meeting of US Fed Monetary policy committee concluded and update hit the market that interest rate was kept unchanged. However, when speaking of future plans, Fed Chair Jerome Powell mentioned that there are no plans for rate hike the year ahead owing to the impact of ongoing Sino-U.S. trade talks and Brexit uncertainties on US economy. Powell also stated economic activity has slowed down in Asia & Europe and the latest economic data hints US economy is also slowing down. So the forecast for economic growth, inflation and unemployment rate for 2019 has been downgraded.
Crude Oil Hits New 2019 High’s On Positive Fundamentals
This caused the US long term government bond yields to slide resulting in US Greenback seeing a sharp decline in the global market. While the US Dollar declined against Canadian Dollar last night, the pair failed to establish a dovish price rally. US Dollar regained strength in early Asian market hours and the pair saw sharp upward price action across Asian and majority of European market hours. However, the pair finally found some resistance near mid 1.33 handle as Crude oil price hit new 2019 highs. Canadian Loonie is a commodity-linked currency and gains ground whenever Crude oil gains in the broad market. Crude oil price in the spot market crossed $60 per barrel hitting new 18 week highs.
The latest supply to demand ratio is currently in favor of crude oil bulls. Ongoing supply disruptions created by US sanctions on Venezuelan and Iranian crude oil and OPEC enforced production and supply cut enforcement continues to help maintain positive price crude oil price in the broad market. While Canadian loonie seems to have gained upper hand it failed to establish a downward corrective price rally owing to lack of trigger that could help Canadian Loonie build downside momentum. Investors now await macro data updates for short term directional cues and profit opportunities. On the release front, Canadian calendar will see the release of wholesale Sales & ADP Non-farm employment change data while the US calendar will see the release of Philadelphia Fed Manufacturing Index data. A positive macro data outcome will cause USD to resume upside price action while a dovish outcome will lead to pair seeing sharp downside move.
Please feel free to let us know what you think in the comments below.
This article was originally posted on FX Empire
More From FXEMPIRE:
- AUD/USD Price Forecast – Australian dollar tries to rally but fails
- GBP/JPY Price Forecast – British pound falls to support
- Crude Oil Price Update – Trying to Establish Support Over Major 50% Level at $59.63
- USD/CAD Overview – The Pair Breaking Last Day’s Major Resistance
- Gold Price Futures (GC) Technical Analysis – Key Pivot Support at $1300.50 Must Hold to Sustain Upside Bias
- US Stock Market Overview – Apples Surges, Biogen Tumbles