The USDCAD remained little changed at near 3-month lows after upbeat Canada GDP data which showed an economic contraction of 7.2%, versus the consensus of a decrease of 9.0%. The figure was however, worse than the last measured GDP figure of 0.0%.
This GDP factors in the economic impact of the coronavirus pandemic. However, markets seem to have turned their attention away from the coronavirus and towards events on the US-China front. US President Donald Trump is expected to give a speech today that will cover the US response to China’s parliamentary approval of a new national security law for Hong Kong. The US views this move as an erosion of the special status of Hong Kong. Beijing has vowed a retaliation to whatever measures Washington will take against it as per the new security law.
The USDCAD remains mostly unchanged as the better than expected GDP figures offset the sentiment from falling crude oil prices this Friday. The WTI is currently down 2% in New York trading, but this has not affected the Loonie adversely as traders prefer to wait for the wording of US President Trump’s news conference on China.
Technically speaking, the USDCAD is sitting on the 1.37629 support level, after breaching the symmetrical triangle on the daily chart to the downside. The price direction for the pair is now purely USD-based, as the outcome of the press conference could determine its further course. A return to safe-haven from tough talk against China and possible sanctions could allow a bounce on the pair, which targets the 1.38605 former support turned resistance. Further advance above this level could target 1.40023, with 1.41514 waiting in the wings if the USD stays on bid.
On the flip side, a softer tone from the press conference could place the USD on offer, which extends this week’s decline against the Loonie towards the 1.36961 support level. 1.35235 could provide additional support to the downside, with previous highs of 28 Feb 2020 at 1.34656 staying relevant if the decline is extensive.