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USDCAD Tests Key Level Ahead of Slew of Top Tier Data

Published October 5, 2016
  • USDCAD is moving higher this morning and testing its 200 Day Moving Average just above the 1.3200 handle
  • The market hasn't traded above the 200 DMA since March and prices failed multiple times to close above it in September, so this is a key level of resistance for the US dollar that if broken has the potential to act as a conduit for the next leg higher in USDCAD
  • Price action across assets is rather tentative as US yields along the curve have risen in recent days
  • December rate hike odds are currently sitting at almost 60%, their best in months (Chart 2)
  • This has lead to a broad based US dollar rally, with the USD Index breaking well above its 200 day moving average for the first time since July
  • There are a number of key data from the US and Canada to be released this morning, highlighted by dual Trade reports for August at 830am ET
  • The US will also report Factory Orders, ISM Non-Manufacturing PMI and ADP Private Payrolls (Chart 3)
  • As well, the US EIA releases official oil inventory figures for last week at 1030am ET and the market is expecting a build of 2.56M barrels of crude
  • WTI is higher heading into the release with prices up 1.6% to $49.50 for WTI; this has failed to correspond with Loonie strength just yet

Charts: (1) USDCAD tests key 200 DMA. (2) US rate hike odds increase. (3) Economic Calendar.