© Reuters.
By Ketki Saxena
Investing.com — The weakened against its US counterpart today, as oil prices fell, down 4% on the day, as concerns about slowing demand remain at the forefront as demand recovery remains muted in China. Investors are also adjusting their positions in advance of key US data and Wednesday’s move from the US Federal Reserve.
Investors expect that tomorrow’s headline figure will show a slowdown to a year-on-year rate of 4.1%, while core measures are expected to decline from 5.5% to 5.3%, year over year.
On Wednesday, markets expect the Fed to hold rates steady, with only about 25% chance of a further rate hike. However, in a tailwind to the USD, rate cuts from the Fed are no longer anticipated by the end of the year.
Nonetheless, markets still remain optimistic on the Canadian dollar, with at least one more rate hike expected from the Bank of Canada.
Data from IG Wealth shows that “77.27% of traders are net-long with the ratio of traders long to short at 3.40 to 1. Our data shows traders are now at their most net-long USD/CAD since May 09 when traded near 1.34. The number of traders net-long is 11.77% higher than yesterday and 38.13% higher from last week, while the number of traders net-short is unchanged than yesterday and 16.21% lower from last week.”
On a technical level for the pair, analysts at FX Street note, “The 1.3350 zone level is key for USD/CAD to maintain its upside bias. If breached, the price could see a steeper decline towards the 1.3310 area and towards the multi-month low at 1.3300. Furthermore, upcoming resistance for USD/CAD is seen at the zone at 1.3380 level, followed by the psychological mark at 1.3400 and the 1.3450 area.”
