USDCAD returns to the unchanged level after a 100 pips daily trading range. The talk of the day was the U.S. Consumer Price Index (CPI) which came in at -0.8% in line with expectations for April. The low gasoline prices and weak demand for goods and services amid the coronavirus lockdown pushed the prices to lower levels. The CPI ex Food & Energy came in at 1.4%, below the forecasts of 1.7% in April. The U.S. NFIB Business Optimism Index came in at 90.9 below the expectations of 96.9 in April.
The United States Redbook Index came up to -1.5% on May 8 from previous -12.6%, while the yearly reading came up to -7.5% on May 8 from -9.3%.
St Louis Federal Reserve President James Bullard said that in the Q3 could see a record annualized economic growth after a record contraction in the Q2 and added that the U.S. couldn’t continue the economic shut down for too long: “Shutdown policy could last perhaps 120 days without the rising risk of bankruptcies, broader financial problems” and he also noted, “The Fed has a good solution for foreign markets in a combination of swaps for some central banks, repo-style facility for others.”
Canadian Loonie is getting a hand today from higher crude oil prices. The WTI crude futures contract is adding 7.75% at $26.02 per barrel, while the Brent oil is 0.24% higher at $30.01.
The USDCAD is 0.20% higher at 1.4034 hovering around the 50-day moving average for the second consecutive day as traders are indecisive for the next move. Last week the pair breached below the 50-day moving average for the first time since February, threatening the bullish momentum. The technical outlook is bearish for the short term while the longer-term picture remains bullish.
On the upside, the initial resistance for USDCAD stands at 1.4064 the daily high. If the pair breaks higher, the next hurdle will be met at 1.4176 the high from May 7 trading session. In case the bullish momentum continues, the next resistance stands at 1.4256 the high from April 22.
On the contrary, first support for USDCAD stands at 1.3972 the daily low. If the pair breaks below 1.3972, the next support will be met at 1.3895 the low from yesterday’s trading session. Next level to keep an eye is at 1.3849 the low from April 30, trading session.