By Ketki Saxena
Investing.com -- The Canadian dollar traded generally flat against the greenback today, gaining some support from crude prices, while domestic manufacturing sales indicated a slowing economy, weighing on the loonie.
Canadian factory sales fell 2.1% in June from May, as per a flash estimate from Statistics Canada.
Meanwhile, crude prices rose after China announced it would accelerate economic policy adjustments designed to support domestic demand and improve market confidence.
However, much of the market action today appears to be just noise while investors await a Federal Reserve interest rate decision tomorrow.
The Fed is expected to hike rates 25 bps tomorrow, with the market largely pricing in that this will be the last hike from the Fed this monetary policy tightening cycle.
On a fundamental level for the pair, analysts at Scotiabank (TSX:BNS) note the possibility that the Fed is ending its rate hike cycle poses as a tailwind for the loonie, as "Risk appetite remains generally positive as markets anticipate slowing central bank hikes."
"That should all be CAD-supportive at the margin, or at least help limit CAD losses, even if focus is elsewhere at the moment."
On a technical level for the pair, analysts at Daily FX note, "USD/CAD appears to be coiling inside a symmetrical triangle, a technical formation composed of two converging trend lines, an ascending one connecting a sequence of higher highs and a descending one linking a series of lower lows."
Accordingly, they provide two case scenarios for the Canadian dollar moving ahead.
"Case 1: USD/CAD breaks topside of triangle at 1.3220. If this scenario plays out, we could see a move towards 1.3275. On further strength, the focus would shift to the psychological 1.3400 level."
"Case 2: USD/CAD breaks triangle support at 1.3140. If this scenario unfolds, the bears could become emboldened to launch an attack on 1.3085. If this floor is taken out, USD/CAD may head towards 1.2960."