USDCAD, H4
USDCAD has breached below 1.3150 again today and is once again testing the six-week low at 1.3115 which was touched on Monday (December 16). This is the fourth consecutive week of declines. Earlier Canadian CPI accelerated to 2.2% y/y in November from 1.9%; although CPI fell -0.1% m/m, the data is supportive for the Loonie.
The Canadian Dollar has been benefiting from positive developments on both the USMCA and US-China trade fronts. The Fed’s removing a forecast for a 25 bps hike in 2020 at its FOMC policy meeting last week also weighed on USDCAD. Another supportive factor for the Canadian currency is higher oil prices, which are showing a near 9% gain from the lows seen in late November. USOil breached and broke $60.00 earlier this week and holds $60.50 today, ahead of the Weekly EIA inventories at 15:30 GMT which are expected to show a drawdown of some 1.5 million barrels. Assuming there are no upsets on the trade front, USDCAD looks likely to continue to trade with a downside bias.
Technically the pair have been moving lower from December 4 and the rejection of 1.3300 and the break and breach of the key 200-day moving average. Next significant support is 1.3100, the October low under 1.3050, and the 2019 low at 1.3015. A break back north of the 20-day, 50-day and 200-day moving averages, which are coalescing around 1.3225, would be required to reverse the downward bias.
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Stuart Cowell
Head Market Analyst
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