- Summary:
- USDCAD is mildly lower after positive BoC Business Outlook Survey report. The USDCAD is now in a tight range and needs further fundamental push.
The USDCAD is trading lower intraday as the generally positive outlook painted by the Bank of Canada (BoC) in its business sentiment survey is helping prop the Canadian Dollar. The USDCAD is now trading at 1.30418 as at the time of writing, as the BoC Business Outlook Survey showed that the sentiment around the business environment in Canada remained broadly positive. The only exception to this was seen in the Prairie Provinces where the sentiment indicators remained weak.
The survey noted an increase in hiring plans by Quebec and British Columbia; less so in other areas. Also, future sales indicators were positive in areas outside the oil-producing regions, with improving foreign demand. Activity in the energy sector is also likely to start picking up as trade tensions ease and inflation is expected to remain in the lower half of the BoC’s target range.
The positive outlook put the USDCAD under some pressure, with the pair trading about 0.06% lower on the day.
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Outlook for USDCAD
The pair broke above the descending channel on Friday afternoon post-NFP, but was unable to maintain the upward move after running into resistance at 1.30632. The pair is now pulling back to the broken channel border, but the downside remains limited.
Price is now stick in a tight range between the channel’s upper border (1.30288) and the horizontal resistance at 1.30632. An upside break of 1.30632 allows the USDCAD to gain upward momentum and push towards the next upside target that is formed by the 20 June/6 Sep 2019 previous lows at 1.31501.
On the flip side, a breakdown of the channel border allows price to get back into the channel, invalidating the upside breakout move and opening the pathway towards the next downside target at 1.29953, which is where October 2018’s lows are found. This support level must be taken out before the channel’s opposing border can become available as a new target.