- The USD / CAD extends the decline from 1.3480 to keep buyers hopeful.
- The risk tone of the market is struggling to find its way after the optimistic performance of the previous day.
- President Trump has tried to be optimistic, but the pre-ECB mood seems to remind the U.S. dollar of the multi-day low.
- Canadian trade figures and unemployment claims from the United States are additional catalysts to watch.
Although the pair’s last withdrawal from 1.3520 eats the main gains of the USD / CAD pair accumulated since the start of Asia, the Loonie pair remains away from the multi-day low of 1.3480 marked the day before Thursday morning.
Given the lack of data / major events during the first day of trading, the markets seem to consolidate the feeling of risk on Wednesday. The movements could also be attributed to the pre-ECB mood.
Despite optimistic comments from US President Donald Trump, the risky tone of the market is struggling to move towards the end. In his last interview with Newsmax, US President Trump reiterated the call not to use more military power to tame the riots in the country while withdrawing all sanctions against Chinese President Xi Jinping for the question of Hong Kong . The Republican leader also seemed optimistic about the American performance and the expected recovery of the economy, but showed a marked dislike for the World Trade Organization (WTO).
After the news, 10-year US Treasury yields moved away from the previous day, dropping 1.7 basis points (bp) to 0.74%. On the contrary, stocks in Japan, Australia and New Zealand remained positive at press time.
The reason for the mixed market signals could be attributed to the feeling of caution ahead of today’s ECB meeting, where the regional central bank is expected to swell the stimulus puck.
In addition to the ECB meeting, Canada’s April trade figures and the US Weekly Jobless Claims could entertain traders before the speech by BOC decision maker Toni Gravelle. While economic forecasts suggest a further decline in the USD / CAD pair, traders can look for confirmation of the BOC’s upside bias at M. Discours de Gravelle.
Given the oversold conditions of the RSI, the USD / CAD pair should record another U-turn from a 200-day SMA level of 1.3465. In doing so, the May 29 low near 1.3715 could become an immediate resistance to watch. It should also be noted that the month of February strengthens support at 1.3465.