Canadian Dollar falling back as markets pivot out of Loonie

• The Canadian Dollar is seeing pullback as investors seek Greenback pastures.
• Canada Trade Balance improves but fails to inspire CAD bidding.
• Broad-market risk sentiment is wobbling, sending safe havens higher.

The Canadian Dollar (CAD) is moving lower, giving up last week’s gains against the US Dollar (USD) as broader market sentiment twists on Tuesday. A large miss for Chinese trade data coupled with hawkish statements from Federal Reserve (Fed) officials are jointly hampering risk appetite.

Canada trade balance figures improved over previous figures, Exports and Imports both printed slight gains for September. Canadian Exports edged higher to $67.03 billion from $65.28 billion (revised upward from $64.56 billion), while Imports saw minor gains to $64.99 billion from August’s $64.33 billion, which was also revised higher from $63.84 billion. 

Canada’s overall International Merchandise Trade for September increased to CAD $2.04 billion from August’s $950 million, revised higher from $720 million.

Daily Digest Market Movers: Canadian Dollar paring back recent gains as markets rotate into US Dollar once more

• The CAD is losing steam with global markets seeking safe harbor as last week’s risk-on mood evaporates.
• A miss for China trade figures sent early Tuesday’s markets into the red after Chinese Trade Balance numbers unexpectedly declined.
• Hawkish Fed appearances are chipping away at last week’s rally as Fed officials reiterate that the US central bank is not pre-committed to an end of rate hikes.
• Crude Oil prices are slumping in risk-off flows, further cutting support from the CAD.
• Russia reaffirmed their production reduction, potentially extending through next year’s first quarter, to little Crude Oil market effect.
• The US is acquiring additional Crude shipments to shore up national reserves, and throughput at both Chinese and US refineries is missing demand expectations, leaving more barrels in the pipeline than expected.
• US Treasury yields are easing, 10-year T-note down to 4.587% from 4.66%.

Technical Analysis: Canadian Dollar heading back to 1.3800 as US Dollar bids return

The Canadian Dollar (CAD) has pared back about half of last week’s gains against the US Dollar (USD), sending the USD/CAD back toward the 1.3800 handle after taking a clean bounce from the 50-day Simple Moving Average (SMA) near 1.3630.

A bullish continuation from here will see the pair marking an accelerating pace of higher lows as the USD/CAD begins to break away to the topside from a bullish trendline rising from July’s bottom bids near 1.3100. The near-term technical ceiling for bullish Greenback bidders sits at the last swing high into the 1.3900 handle.

The US Dollar is up over 5% against the Loonie from 2023’s low bids of 1.3092 and up over 1.5% on the year.

USD/CAD Daily Chart