The US Dollar finished little changed against the Canadian Loonie in volatile trade yesterday. The USD/CAD pair slumped initially on broad-based US Dollar selling to 1.34677 before rallying to finish just under the 1.3500 level at 1.3495. USD/CAD reached a high at 1.3541 overnight following the release of Canada’s trade numbers. Canada’s May trade deficit widened to -CAD 3.3 billion from April’s deficit of -CAD 1.5 billion, underwhelming forecasts at -CAD 2.7 billion. Canada is a trade sensitive country, with much of its revenue coming from oil and other commodity exports.
A Bloomberg report that new government modelling could see Canada’s coronavirus cases rise by as much as 15% by the middle of the month. Which kept the USD/CAD resilient and the US Dollar is oversold.
Canada’s Payrolls are forecast to fall to -500,000 in May from April’s -1.994 million. The Unemployment rate is forecast to climb to 15% from 13%. As markets are expecting slightly better numbers, the risk is for a disappointment.
USD/CAD has immediate support at 1.3460 followed by 1.3420. Immediate resistance lies at 1.3540 followed by 1.3590. Prior to the US and Canadian Payrolls, look to trade a likely range of 1.3470-1.3570. Prefer to buy USD dips.