- CAD rising across the board on hopes for US trade deal
- Canadian trade balance rises more than expected
- US equivalent also above forecast
It’s been a good day for the Loonie so far with the Canadian dollar rising across the board and currently the best performer out of all the majors. The appreciation appears to have been caused mainly rising hopes of a amicable solution to the ongoing discussions with Canada’s biggest trading partner, the US. We noted yesterday that the Mexican Peso had reacted negatively to reports that the US was looking to push ahead with bilateral trade talks with Mexico and Canada individually, but this seems to have been viewed favourably from a Canadian perspective.
CAD is the biggest winner out of all the majors so far today, gaining by 0.9% against both CHF and JPY. Source: xStation
This afternoon there’s been two pieces of trade data out; one each from Canada and the US and both of these have beaten forecasts. First off let’s look at the Canadian print where the trade balance figures for April came in better than expected at -1.9B vs -3.4B exp and -3.9B prior (prior revised higher from -4.1B). The US equivalent was arguably even better with a reading of -46.2B compared to an expected -50.0B and there was also a notable upwards revision to the previous print which now stands at -47.2B after previously being 49.0B.
Both the US and Canadian trade balance figures improved more than expected in the month of April. Source: Bloomberg
The USDCAD has been subject to a couple of bank recommendations in the past week and the market appears to be at a potentially key level. Price has been consoldating in the past couple of months after making a low of 1.2530 back in April with a rising trendline providing support and prior resistance in the region from 1.3020-1.3127 proving a birdge too far for the longs.
USDCAD is threatening to make a break lower today after yesterday saw a move higher met with pretty firm resistance. Source: xStation
Recent trade has seen the market move down to test this rising trendline after yesterday’s session saw price push higher before being met with sellers. A long wick above Tuesday’s D1 candle indicates this strong selling pressure and if the rising support fails to hold then a move to retest 1.2750 and even 1.2530 may be in store.