The US dollar is slightly up to mixed against other major currencies as news-flow around a “phase one” US-China trade deal has been broadly optimistic. After a strong start in the Asian session, the Canadian dollar is also losing ground against the greenback on the fresh risk-on sentiment that has started at the beginning of the week.
Oil prices are retreating from fresh monthly highs, which also has also put some selling pressure on the Canadian dollar in today’s trade. Markets are now awaiting the US crude oil inventories report, which is expected to show a fall in weekly oil inventories to 1.9 million barrels, down from 5.9 million in the previous week.
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Markets got another push by US Commerce Secretary Wilbur Ross, who said that he’s “optimistic about getting Phase 1 US-China deal done,” and that US companies could soon get licenses to sell to Huawei.
The US dollar has also been supported by better-than-expected PMI numbers for the non-manufacturing sector, who came in at 54.7 yesterday. Markets were forecasting a modest rise to 53.5 points.
Technicals show a mixed picture with the pair stuck in a consolidation phase after the strong upturn of last week. A short-term falling channel could provide resistance for the pair and attract fresh selling power, with the yesterday’s low of 1.3115 acting as a mid-term support level.
A break above the upper channel line could see the pair retesting last week’s highs of 1.3208, followed by the October 15 high of 1.3239 — a level that aligns with the 61.8% Fib of the October downtrend. As of 2:30 p.m. London time, the US dollar traded at 1.3173 against the loonie.
