Economic activity in the non-manufacturing sector grew in June for the 65th consecutive month. The NMI registered 56 percent in June, 0.3 percentage point higher than May’s reading of 55.7 percent. The non-manufacturing sector continues to grow at a slightly faster rate. The Non-Manufacturing PMI increased to 61.5 percent, which is 2 percentage points higher than 59.5 percent in May, reflecting growth at a faster rate for the 71st consecutive month.
Falling oil prices depressiat CAD against USD. The June Canada PMI fell to 55.90, which is another factor behind weakness of CAD.
Ahead of the FOMC meeting minutes, USD is trading lower against CAD at today’s Asian session. The 20Wsma is found at 1.2400 and the parallel resistance is seen at 1.2667 and 1.2711. Bulls laid a strong base in different layers initiated at 1.2200, later extended at 1.2300 and 1.2400. The hourly oscillators indicate overbought, negative divergence has been formed in the H1 and H4 charts. We can observe higher highs and higher lows in the daily and hourly charts. In case of positive news from Greece big moves in EUR/USD and big falls in USD/CAD. This is the only pair taken an advantage from the Greek saga in the near term. The oil prices help CAD rebound.
We have been recommending buying at 1.2380 with targets at 1.2560, 1.2660, and even 1.2800. Now, 1.2665 is done. We are a bit concerned about big negative divergence in the hourly charts. We expect maximum 1.2760 or 1.2800 from here on. We are approaching the FOMC meeting minutes. We request traders to book profits once at today’s session. After the FOMC event we will open trades again. Intraday support is found at 1.2630, 1.2500, and 1.2460. Resistance is seen at 1.2670, 1.2720, and 1.2770. Intraday fresh buying is available above 1.2680 with targets at 1.2710, 1.2750, and 1.2780 only for risk traders. Bears can sell at higher levels and hold there during next 1 or 2 days. The pair makes a strong bullish breakout on the symmetric triangle. Ahead of the FOMC meeting, we expect mild correction in coming days.
Today, traders eye the US and Canadian trade balance. Bulls can reach 1.2770 at today’s session. Use rises to sell.
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