USD/CAD has been quite corrective recently inside the range of 1.2420 to 1.2660. USD has been weighed down by weak economic reports recently whereas a positive report from Canada today helped with CAD gains. Recent FOMC minutes were bearish for USD which led to further weakness against CAD. Nevertheless, the bias is bullish in the long term. Today CAD Manufacturing Sales report was published with an increase to 1.6% from the previous negative value of -2.6% which was expected to be at -0.1%. It is the leading indicator of the economic health, so positive outcome of the economic report is expected to provide a better push to the CAD for further gains against USD. On the USD side, today Building Permits report was published with a worse figure of 1.22M from the previous figure of 1.27M which was expected to be at 1.25M, Housing Starts report also showed a decrease to 1.13M which was expected to be unchanged at 1.18M, and Crude Oil Inventories report was published with a greater deficit to -5.7M from the previous deficit of -2.7M which was expected to be at -4.7M. Along with the economic reports today, FOMC Member Dudley and Kaplan spoke about the interest rate and future monetary policies, expressing the neutral stance. As for the current scenario, USD is quite weak against CAD now but still there are certain possibilities of USD to regain the strength and proceed further upwards. This week, US Unemployment Claims and Canada's CPI and Core Retail Sales report are due to be published which is expected to provide a further directional indication of this pair in the coming days.
Now let us look at the technical chart. The price is currently residing above the support level of 1.2420 and a dynamic level of 20 EMA which is expected to push the price higher towards 1.2660 and later towards 1.28 resistance area. The recent trend has been bullish which is currently corrective. As the trend consists of impulsive and corrective moves, the pair is expected to trade higher towards 1.2660 in the coming days.
