- WTI weakness, China data and USD recovery triggers the upside.
- A few second-tier data and speech from the BOC’s Wilkins will be awaited to challenge 1.3375 resistance.
USD/CAD greets the intra-day high of 1.3345 ahead of the European session on Thursday. The Loonie pair surged due to mixed factors ranging from crude’s pullback to China’s soft data and renewed buying of the US Dollar (USD). Traders may now await second-tier data from the US and Canada together with a speech from the BoC’s Wilkins for the additional guidance.
WTI has been struggling near the five-month high as API and EIA both confirmed higher inventory levels whereas sluggish global GDP forecast from the IMF also played its role in dragging the back gold downward. API Crude oil stocks grew 4.091 million from 2.963 million prior whereas EIA inventories crossed 2.294 million market consensus with a 7.029 million figure. Earlier during the week, the International Monetary Fund (IMF) cuts its global growth forecast to the lowest levels since 2009. It was also the third straight cut from the international lender.
China’s inflation numbers flashed mixed readings as the headline consumer prices index (CPI) grew lesser than 2.4% market forecast to 2.3% on YoY whereas declining to -0.4% from -0.2% figure expectations on monthly basis. Though, the Producer Price Index (PPI) matched forecast of 0.4% and remained up from +0.1% prior.
The US Dollar (USD) came back on the market demand as investors dropped their bids on commodities amid sluggish China data whereas positive news on the US-China trade front further strengthened the greenback.
Looking forward, traders may follow monthly New Housing Price Index (NHPI) from Canada followed by the speech from Bank of Canada’s (BOC) governing council member Carolyn Wilkins at the World Bank’s panel discussion. From the US, weekly initial jobless claims and monthly PPI figures will be the key to watch.
While Canadian NHPI could reimburse earlier -0.1% losses with +0.0% figure during February, recent improvements in Crude prices, Canada’s main export, could help the BOC member to remain hawkish while speaking at the panel discussion.
The US PPI may remain unchanged at 1.9% on YoY basis but could increase to +0.3% from +0.1% on the monthly format in March. Further, the PPI ex-food and energy, also known as Core PPI, may soften to 2.4% from 2.5% on yearly footage whereas MoM figures may improve to +0.2% from +0.1% previous outcome. Also, initial jobless claims for the week ended on April 05 could increase to 211K from 202K.
USD/CAD Technical Analysis
A fortnight old descending trend-line near 1.3375 can limit immediate upside, a break of which can escalate recent recovery towards 1.3410 and another resistance-line near 1.3445/50.
On the downside, 50-day simple moving average (SMA) level near 1.3300, 1.3230 and 200-day SMA around 1.3195 could be considered as strong supports.
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