It’s a big news day for the USD/CAD. Earlier this morning, U.S. FED Chairman Jerome Powell wrapped up his semi-annual Congressional testimony. Later this afternoon, BoC Governor Stephen Poloz is scheduled to speak publicly. When you take into account these two events and today’s action in WTI crude oil, participation has been heavy in the Loonie.

Powell Concludes Testimony

Earlier, Jerome Powell concluded his first Congressional Testimony of 2020. Day one brought a confident statement that the U.S. economic expansion was “stable and sustainable.” Thus far, day two has brought bearish pressure to the USD/CAD. Here are a few of the highlights:

• The coronavirus is a major concern, but it is too early to determine the extent of the damage.
• Coronavirus fallout will be heaviest in China, impacting supply chains and foreign trade.
• A financial market reaction to the virus is expected.
• The FED is extremely focused on the threat of cyber attacks.
• Healthcare spending is the premier issue of the 2020 U.S. Federal Budget.
• International trade uncertainties have declined and may promote foreign investment. 

All in all, there weren’t any shockers in today’s testimony. According to Powell, the upside potential of U.S. markets remains attractive and FED policy is in a good place. American stocks are echoing these sentiments, with the DJIA, S&P 500, and NASDAQ posting strong intraday rallies.

Powell’s testimony has done little to stem the bearish tide in the USD/CAD. Perhaps Poloz’s speech later today will bring some bids to this market.

USD/CAD Plunges Beneath 1.3250

In a Live Market Update from earlier this week, I issued a short trade recommendation for the USD/CAD. The sell turned out to be a success, producing a 42 pip profit after only a 15 pip draw.

Overview: At press time (about 1:15 PM EST), the USD/CAD is taking a break near the Daily SMA (1.3251). If rates close the Wednesday session above this level, we may be in for a retest of the 1.3320-27 area before the weekend break.