The Canadian economy got a welcome boost today as trade balance data was more positive than economists expected, coming in at -1.9b (-2.5b exp). This was greeted positively in the Canadian economy which has so far been struggling under the weak commodity prices and especially around oil prices in particular. However, oil has been on the rebound as of late and this has been seen in the short term to offer some reprieve for the Canadian economy, which is still pushing on with its own commodity focused programs to boost the economy. The reality of the recent jump in oil prices is if it can actually be sustained, many are wondering if we had bottomed out and we may even see further upside potential after the recent crude oil inventory in the US showed a drawdown of -2.98M barrels. I would expect a slow recovery in oil and anything above the $50 dollar a barrel mark is likely to struggled unless OPEC actually puts in production cuts.
For the USDCAD it has been a mixed bag as many had expected that the USDCAD would fall as the Canadian economy improves and as oil continues to push upwards. However the US dollar has found some strength as people find themselves being bullish for the most part and economic data today out of the US painted a rather positive picture. The USDCAD lacked enough momentum to hit resistance at 1.3275 and this has set up a decent head and shoulders pattern on the charts. It looks likely we could see some further falls lower to support around 1.3149 and 1.3000 which is acting as the psychological level in the market. The 50 day moving average could also move upwards and it will be interesting to see if it can hold back any further bearish movement in the long run.
The Australian dollar also was relatively upbeat today as retail sales m/m came in at 0.4% (0.2% exp) beating the previous months flat reading of 0.0%. The Australian dollar has for the most part found itself under a fair amount of pressure in recent days after the cash rate was held at 1.50%, but the Reserve Bank of Australia warned of difficult market conditions on the horizon and that Australia may be further impacted. I've spoken previously about how the Australian economy is struggling, but for the AUD it still finds itself to be a popular currency for its interest yield; hence the appreciation in the currency at the end of the day.
AUDUSD technically speaking has struggled to find momentum today after some large swings. Dynamic support was formed around the 20 day moving average and it has so far been held up at the 23.6 fib ratio. Below these levels support is likely to be found at 0.7582, with the next major level at 0.7467. I would expect that if the USD remains strong we may see further losses for the AUDUSD when it comes to bearish movement.
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