- US trade balance drops more than expected to -48.7B
- Canadian equivalent beats estimates to come in at -1.5B
- USDCAD falls to its lowest level since October
Whilst the biggest economic release of the afternoon from North America is the ISM non-manufacturing PMI (3pm GMT release), some trade balance data from both the US and Canada has seen the USDCAD fall to its lowest level since October.
The US trade balance for October was expected to drop further, but the fall to -48.7B was larger than the -46.2B expected. The prior reading was -43.5B before being revised lower to -44.9B.
The US trade balance figures, whilst volatile, have been declining on the whole over the last two years. Source: Bloomberg
At the same time as the US release, there was some more good news from Canada with their latest trade data showing a deficit of 1.5B - higher than the -2.3B expected. The prior reading here was also revised lower, in this case to -3.4B from -3.2B prior.
The Canadian trade balance has improved lately and moved away from its lowest levels of the last 5 years. Source: Bloomberg
The Canadian dollar has been one of the best performers against the greenback in the past week with some stellar data last Friday seeing the USDCAD form a double top pattern around the 1.29 handle.
USDCAD has continued lower today following the data and adding to recent declines. Source: xStation
The pair as today dropped below a prior swing level at 1.2665 and this could be seen also as a neckline in the double top pattern. A possible target for this setup would be the distance from the double top to the neckline (251 pips) below the neckline. This would give 1.2414. However, traders may look to take profits on shorts around 1.2445 ahead of the textbook target due to its previous significance as a swing level.
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