- Canada Weak GDP
- U.S Dollar Safe Haven Demand
- USD/CAD Outlook
The USD/CAD pair was upbeat, Wednesday morning, after coming under pressure despite Canada printing weak GDP data. The CAD strengthened on Tuesday, as traders shunned the U.S dollar amidst risk-off sentiment fuelled by the COVID-19 pandemic.
Since the start of the week, the Canadian Dollar has been on an impressive run registering substantial gains the greenback. The gains have come at the backdrop of surging risk sentiment in the market as a spike of coronavirus infections in the U.S continues to send traders to safe-havens.
Time : 07-01-2020
Pivot : 1.3611
Technical View : Short Below 1.3591
Target : 1.3571 next 3 targets are 1.3507, 1.3465 and 1.3376
Comments : Weak Bearish
Last Price : 1.3560
CAD is the subject of a renewed buying spree in the market on oil prices rallying towards the $40 a barrel level. Traders have continued to shrug off the oil gains in favor of the USD/CAD pair.
Amid the gains, the CAD could come under pressure as weak Gross Domestic Data continue to arouse concerns about the Canadian economy. Preliminary estimates indicate that the economy contracted by 11.6% in April compared to an 11.6% decline in March.
All most all sectors of the Canadian economy contracted in April affirming the impact of the COVID-19 disruptions. Manufacturing sectors was down by 22.5% in the month. With all 20 industrial sectors contracting, it marked the largest monthly decline in more than 50 years.
U.S Dollar Strength
A resurgent dollar, on the other hand, threatens to curtail Canadian dollar gains going forward. The greenback continues to elicit bids as a safe-haven in response to risk aversion in the market fuelled by a spike in coronavirus cases.
The U.S has already recorded more than 47,000 new cases in a single day with Dr. Anthony Fauci warning that the cases top highs of 100,000. Investors are increasingly rushing to the greenback, fearing the second wave’s potential impact on economic recovery. A string of positive economic data also continues to offer support to the U.S Dollar. For starters, the U.S consumer confidence posted its biggest gain since 2011, jumping to 98.1 against estimates of 91.5.
Looking ahead, the U.S dollar will be in the spotlight with the release of Markit PMI data for June and the ISM manufacturing data.