USD/CAD testing highs near 1.3070 on USMCA headlines

• USD/CAD challenging the upside amid trade deal worries, weaker oil prices.
• USMCA debate by Democrats underway, appear split on the new trade deal.
• Eyes on USD dynamics, risk sentiment ahead of US-China trade deal signing.

The Canadian dollar trades near daily lows vs. its American counterpart amid a divide over the new NAFTA trade deal. USD/CAD extends its overnight recovery and flirts with daily highs of 1.3072, marginally up on the day.

The new North American Free Trade Agreement (NAFTA), the United States Mexico Canada Agreement (USMCA), is being debated by six Democratic presidential candidates now in Iowa, Reuters reports.

Senators Elizabeth Warren and Bernie Sanders are on the opposite sides of the table, with Warren supporting the USMCA while Sanders said he is against it.

This comes as Senate Republicans are attempting to pass the stalled US trade deal with Mexico and Canada this week before President Donald Trump’s impeachment trial begins this Thursday.

The resource-linked CAD also remains pressured by the recent weakness in oil prices after the weekly Crude Stocks data, published by the American Petroleum Institute late Tuesday, showed a build in inventories last week.  

Further, the US dollar consolidates the recent losses against its main competitors after the USD bulls were hammered down by in-line with estimates US CPI data and renewed concerns over the US tariffs on China.

The news that the US did not plan to cut China tariffs until after the Nov election continues to weigh on the risk sentiment, as markets eagerly await the details of the US-China phase one trade deal ahead of the signing ceremony due later on Wednesday at 1630 GMT.  

USD/CAD Technical levels to watch