USDCAD is still moving inside an ascending channel on its daily and 4-hour time frame, but price is nearing the top of the formation so a selloff might be due. This resistance is located around the 1.3250 to 1.3300 psychological levels, which might keep gains in check.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, price has already broken above the 200 SMA, signaling a surge in upside momentum and a potential upward crossover for the moving averages.
Stochastic is already indicating overbought conditions, which means that buyers are exhausted and might let sellers take over soon. In that case, USDCAD could head back to the channel support at the 1.2850 to 1.2900 psychological support levels.
Economic data from Canada came in mixed, as the current account deficit widened on weaker export activity. This led market watchers to price in weaker GDP data for today. A monthly growth figure of 0.4% is eyed. Meanwhile, leading inflation indicators came in mixed, with the RMPI posting a sharper than expected decline and the IPPI showing a small uptick.
As for the US, the CB consumer confidence index beat expectations with a rise from 96.7 to 101.1 in August, hinting at stronger consumer spending down the line. The ADP non-farm employment change, Chicago PMI, and pending home sales are lined up for today.
The ADP report could show a 174K increase in hiring for August, slower than the earlier 179K gain, but a higher than expected read could mean an upside NFP surprise and stronger dollar gains. The Chicago PMI is expected to dip from 55.8 to 54.1 while pending home sales could show a 0.7% gain.
By Kate Curtis from Trader’s Way