The USD/CAD pair fell during the session on Tuesday, breaking below the 1.35 level again. The oil markets have seen a significant amount of buying pressure, and with the OPEC meeting coming later this week, this pair could come into focus. Not only that, but we have a Bank of Canada interest rate announcement and statement coming out today. There are a lot of reasons to think this pair will be very active over the next couple of sessions. Currently, looks as if the sellers are very much in control, but a few choice words out of Canada could change everything immediately. Having said that, I do have the inclination of bearish attitude for a couple of days.
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GBPUSD – The British Pound has rallied around 500 pips since Theresa May made the announcement for a snap general election. At the time of the announcement, polls were showing that the Conservative Party had a 19% lead over the Labour Party and this was a pound positive as the UK prepared for Brexit negotiations. However, just over a month later, things are not looking as bright for the Conservative Party or the Pound. At the start of this week, polls have shown that the Conservatives now only lead by 9%. Along with this, Brexit secretary David Davis announced over the weekend that the UK would walk away from Brexit talks if the EU didn’t drop its demand for a €100 billion ‘divorce’ settlement.
Meanwhile, in the US, investors are hoping for a quieter week on the political side whilst Donald Trump is travelling in the Middle East and instead they are awaiting today’s FOMC minutes. It is being widely anticipated that the Fed will give some sort of indication for a June or July rate hike. This has given a short term bullish sentiment on the US Dollar with the medium-term sentiment being neutral as traders wait and see whether Donald Trump will be able to deliver his fiscal reforms.
GBPUSD formed a triple top on the hourly chart earlier this week and the fundamental drivers talked about here have helped to push GBPUSD down towards 1.293. This pair is currently in a support zone and we could see price head down towards the 1.285 level. If the FOMC minutes come out as expected, we may see some retracement as traders take profits before seeing the dollar strengthen further.
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