Home Fundamental Comment USDCAD chases 1.20 psychological level after downbeat trade data
USDCAD chases 1.20 psychological level after downbeat trade data

USDCAD chases 1.20 psychological level after downbeat trade data

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USTradeDeficit031015The USDCAD pair retreated after a report showing U.S. trade deficit climbed to the highest level in more than six years in March.

The trade gap rose widened to $51.4 billion in March, the largest since October 2008, from $35.4 billion in February. Analysts had estimated the deficit to jump to $41.2 billion.

The data moves in line with last week’s dismal report that signaled a tremendous ease in U.S. first-quarter growth to 0.2 percent, down from 2.2 percent in the previous quarter.

In Canada, the trade deficit also mushroomed to a record high of $3-billion in March from a revised of $2.2-billion shortfall.

Although both U.S. and Canada data missed forecasts, the pair fell as investors give more focus to U.S. data before the release of the awaited nonfarm payrolls data on Friday.

The NFP may signal American employers added 231,000 jobs in April from 126,000 jobs in March.

Later in the day, a U.S. report may show services sector growth eased to 56.2 in May from 56.5 a month earlier.

USDCAD

As of 14:16 GMT, the USDCAD traded around 1.2057 after setting a new low of 1.2045.

The pair now heads to the physiological support level at 1.20, where the closing above this level last week helped the pair to avoid further losses.

However, further bearishness may take place due to the cross of Daily SMA20 over SMA50, yet a breach of the 1.20 level is needed.

For the bearish scenario to occur, the RSI 14 momentum indicator must drop beyond the 30 line.

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Ahmed Mamdouh Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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