Date | Rate | Change |
---|
USD/CAD trims intraday losses but remains in the negative zone, which could be attributed to an improved US Dollar (USD). The USD/CAD pair edges lower to 1.3580 during the Asian trading hours on Tuesday.
Additionally, the decline in Crude oil prices could have provided pressure to undermine the Canadian Dollar (CAD), reinforcing the USD/CAD pair. West Texas Intermediate (WTI) oil price edges lower to near $81.70 per barrel, by the press time. However, oil prices strengthened after the United States Energy Information Administration (EIA)increased its forecast prices for Crude oil and petroleum products for the remainder of 2024.
Moreover, the Canadian Dollar (CAD) encountered downward pressure following indications from the Bank of Canada (BoC) of possible rate cuts in 2024, as revealed in its latest meeting minutes. Deputy Governor Toni Gravelle reiterated the central bank's commitment to completing quantitative tightening by 2025, underscoring its sustainability amid incremental interest rate decreases. Investors are likely to await the release of Canadian Gross Domestic Product (GDP) data for January, scheduled for Thursday, which could further impact market sentiment.
The US Dollar Index (DXY) attempts to retrace its recent losses, inching higher to near 104.20, by the press time. However, the decline in the US Treasury yields, which could have put pressure on the US Dollar. Market sentiment is leaning towards expectations of the Federal Reserve (Fed) commencing an easing cycle, with speculations pointing towards a potential start in June. Traders will likely watch Consumer Confidence for February on Tuesday.
Atlanta Fed President Raphael Bostic anticipates only one rate cut this year, emphasizing the potential for increased disruption if rates are reduced prematurely. Conversely, Chicago Fed President Austan Goolsbee aligns with the majority of the board, foreseeing three cuts. However, Goolsbee emphasizes the importance of additional evidence showing a decline in inflation before advocating for rate cuts.
USD/CAD gains stall around 1.3600. Economists at Scotiabank analyze the pair’s outlook.
Short-term price action is leaning negative for the USD after spot peaked a little below 1.3615, close to where the USD has topped out a number of times since late February.
Price action is bearish (an ‘evening star’ candle pattern formed on the six-hour chart since late Friday) which should mean some corrective drift lower in in funds in the near term towards 1.3535/1.3555.
The low 1.3600 zone continues to look pretty solid resistance for the USD.
USD/CAD maintains its position in positive territory after paring back some gains on Monday. The pair trades higher around 1.3600 during the Asian trading session, following hawkish remarks from Federal Reserve Bank of Atlanta President Raphael Bostic on Friday. Bostic adjusted his earlier projection of two interest rate cuts this year, now forecasting only one, citing persistent inflation and stronger-than-expected economic indicators.
Moreover, the Canadian Dollar (CAD) faced downward pressure as the Bank of Canada (BoC) hinted at potential rate cuts in 2024 in its latest meeting minutes. Deputy Governor Toni Gravelle reaffirmed the central bank's intention for quantitative tightening to conclude by 2025, highlighting its sustainability amidst gradual interest rate reductions.
The CAD receives support from higher Crude oil prices, which in turn limits the losses of the USD/CAD pair. Additionally, better-than-anticipated Canadian Retail Sales data might have contributed to bolstering the Canadian Dollar.
The US Dollar Index (DXY) declines to near 104.40 as the 2-year and 10-year yields on US Treasury bonds hold at 4.60% and 4.21%, respectively, at the time of reporting. Despite the uptick in US Treasury yields, the US Dollar (USD) fails to find support.
Federal Reserve Chair Jerome Powell mentioned during a press conference, that an unexpected increase in unemployment could prompt the central bank to consider reducing interest rates. Powell also reassured markets that the Federal Reserve would not hastily react to consecutive months of heightened inflation figures.
Market participants will likely monitor the release of Gross Domestic Product (GDP) data for the fourth quarter of 2023 from the United States (US). Additionally, attention will be on Canadian GDP data for January, scheduled for release on Thursday.
The USD/CAD pair jumps to 1.3570 in the early New York session on Friday. The Loonie asset advances as appeal for the US Dollar strengthens on expectations that the Federal Reserve (Fed) needs not to rush for rate cuts.
The consumer price inflation in the United States economy is sticky and the US economic outlook is upbeat due to robust consumer spending and steady labor market conditions. This allows the Fed to observe more data for months before shifting to rate cuts.
This has dampened market sentiment. S&P 500 opens on a slightly bearish note amid caution that the Fed will not start reducing interest rates until it gains greater confidence that inflation will decline to the desired rate of 2%. The US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, refreshes monthly high at 104.44.
Meanwhile, the Canadian Dollar weakens on expectations that the Bank of Canada (BoC) will start reducing interest rates. The speculation over BoC rate cuts deepen as the consumer price inflation for February remains softer than expectations.
In February, the annual headline Consumer Price Index (CPI) grew at a slower pace of 2.8% than expectations of 3.1% and the former reading of 2.9%. On a monthly basis, the headline CPI rose by 0.3% against the expectation of 0.6%. The Bank of Canada’s (BoC) preferred inflation measure, which strips of eight volatile items grew at a steady pace of 0.1% on a month-on-month basis. The underlying inflation decelerated to 2.1% from 2.4% in January.
USD/CAD’s solid rebound from the mid-1.3400 area is extending. Economists at Scotiabank analyze the pair’s outlook.
There is little reason to expect gains to stop here.
Trend momentum readings are edging bullish on the intraday and daily DMI oscillators and there is no obvious resistance above the market until the low 1.3600 area.
Support is at 1.3550 and 1.3515.
See: USD/CAD could head higher towards 1.3730 once a break above 1.3620 materializes – SocGen
USD/CAD rebound has stalled after approaching the December high of 1.3620. Economists at Société Générale analyze the pair’s technical outlook.
The USD/CAD pair has experienced a sideways consolidation since last month. The flattish slope of 200-DMA denotes a lack of clear direction.
Lower limit of the recent range near 1.3440 is important support.
Once a break above 1.3620 materializes, USD/CAD could head higher towards 1.3730, the 76.4% retracement from November and perhaps even toward the graphical hurdle of 1.3860/1.3900.
The USD/CAD pair rises to 1.3570 in Friday’s European session on a buoyant US Dollar. The Loonie asset is expected to continue its upside move as the appeal for safe-haven assets remains upbeat.
The US Dollar Index (DXY) rose to a fresh two-week high at 104.20 on upbeat Existing Home Sales data for February, released on Thursday. Sales of pre-owned residences rose by 4.38 Million, the most in a year, against expectations of 3.94 Million and the prior reading of 4.00 Million. This demonstrates improving United States economic prospects despite interest rates remaining historically high in the range of 5.25%-5.50%.
Compared with other developed economies, the US economic outlook is stronger due to robust consumer spending and upbeat labor market conditions. The Federal Reserve (Fed) is not expected to rush for rate cuts as inflation remains higher than expected in February, strengthening the US Dollar.
Meanwhile, price pressures in the Canadian economy are decelerating at a faster pace, boosting expectations for the Bank of Canada (BoC) to reduce interest rates sooner.
USD/CAD approaches the horizontal resistance of the Ascending Triangle pattern formed on a daily timeframe, plotted from December 7 high at 1.3620. The upward-sloping border of the aforementioned pattern is placed from December 27 low at 1.3177. The chart pattern exhibits a sharp volatility contraction.
The near-term appeal is bullish as the 20-day Exponential Moving Average (EMA) near 1.3520 continues to provide support to the US Dollar bulls.
The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among investors.
The Loonie asset would observe a fresh upside if it breaks above December 7 high at 1.3620. This will drive the asset towards May 26 high at 1.3655, followed by the round-level resistance of 1.3700.
On the flip side, a downside move below February 22 low at 1.3441 would expose the asset to February 9 low at 1.3413. A breakdown below the latter would extend downside towards January 15 low at 1.3382.
The USD/CAD pair trades on a weaker note above the 1.3500 mark during the early Asian trading hours on Friday. The decline of the US Dollar (USD) below the 104.00 mark weighs on the pair. At the press time, USD/CAD is trading at 1.3523, losing 0.05% on the day.
The Federal Reserve (Fed) held steady on interest rates at its March meeting on Wednesday and maintained its forecast for three interest rate cuts this year. During a press conference, Fed Chair Jerome Powell noted that a strong jobs market wouldn’t deter the central bank from cutting rates.
On Thursday, the US S&P Global Manufacturing PMI increased to 52.5 in March from 52.2 in February, above the estimation of 51.7. The Services PMI eased to 51.7 in March from the previous reading of 52.3, below the market, consensus of 52.0. Finally, the Composite PMI arrived at 52.2 in March versus 52.5 prior.
On the Loonie front, the Bank of Canada (BoC) Summary of Deliberations from its March meeting showed that the governing council agreed that if the economy continues to evolve “in line with the Bank’s projection, the conditions for rate cuts should materialize over the course of this year. However, the timing of rate cuts remains uncertain. The BoC Governor Tiff Macklem said the central bank did not want to move too quickly, only to have to reverse course later.
Moving on, the Canadian Retail Sales for January is due on Friday, which is estimated to decline by 0.4% MoM. The Fed Chair Jerome Powell and Michael Barr are set to speak on Friday.
USD/CAD is steady on Thursday. Economists at Scotiabank analyze the pair’s outlook.
Lower US rates and narrower US/Canada spreads are supportive of a somewhat firmer CAD in the near term and the CAD-positive turn in seasonal trends into Q2 remains something to keep in mind.
On the one hand, the USD’s tumble from the low 1.3600 area on Wednesday marks another, clear rejection of 1.3600+ on the short-term chart which should really mean spot gravitates to retest the range low at 1.3420 at least. On the other, intraday patterns indicate a firm rebound in the USD from the intraday low which may mean the USD pushes back up to the low/ mid-1.3500 area before renewed selling pressure emerges.
The 1.3600/1.3610 looks very firm resistance now and a low close on the week for the USD should drive more losses and a deeper correction of the USD’s Q1 strength in the weeks ahead.
USD/CAD trades at the bottom of a multi-week range after breaking back above 1.3500 on Thursday. The pair is stabilizing after its steep sell-off following the Federal Reserve’s (Fed) March policy meeting, at which officials struck a more-dovish tone than had been expected, leading to a weaker US Dollar (USD).
According to its own projections, the Fed continues to expect to make three 0.25% interest rate cuts (of 0.25% each) in 2024, in response to cooling inflation. Some analysts had expected a reduction in the Fed’s forecasts to only two rate cuts due to warmer-than-expected inflation readings at the start of the year.
Lower interest rates are negative for a currency as they attract less inflows of foreign capital so the Fed’s persistence in expecting three rather than two cuts in 2024 led USD to sell-off, and USD/CAD to weaken.
The Fed’s stance contrasts with that of the Bank of Canada (BoC) which has been reluctant to reveal whether or how many rate cuts it expects to make in 2024. That said, the BoC suggests rate cuts may be on the cards, according to the last BoC meeting minutes, the Summary of Governing Council Deliberations (SGCD).
“Members agreed that if the economy evolves in line with the Bank’s projection, the conditions for rate cuts should materialize over the course of this year. However, there was some diversity of views among Governing Council members about when there would likely be enough evidence that these conditions were in place,” says the BoC.
One of the conditions BoC members agreed on was that they would want to see sustained easing in underlying inflation before cutting interest rates. One measure of underlying inflation is core inflation.
Since the March meeting, core inflation data has been released, showing an unexpected cooling in February. Canadian Core CPI fell to 2.1% in February compared to 2.4% in January. Whilst on a monthly basis, Core CPI increased 0.1%, the same as in January, according to Statistics Canada.
The data, “could lead to incrementally more dovish language from the BoC at its upcoming April 10 meeting,” said David Doyle, head of economics at Macquarie. However, Macquarie’s economists, “still see hopes for an imminent rate cut as premature.”
With cooling inflation in Canada contrasting with warming inflation in the US the expectation would be for USD/CAD to probably rise.
From a technical perspective, USD/CAD is making slow but steady progress higher within an ascending channel.
US Dollar versus Canadian Dollar: 4-hour chart
The pair appears to be rotating at the bottom of the range and in the process of swinging higher, though it is still too early to say whether it will rise all the way to the top of the channel again.
If it can push above the cluster of major Simple Moving Averages in the lower 1.3500s there is a good chance it will have the momentum to continue higher to the top of the range at roughly 1.3620. A break above 1.3550 would provide a degree of bullish confirmation.
Alternatively a decisive bear break below the lower borderline of the channel at roughly 1.3440 would signal more downside, first to 1.3420, and then 1.3370.
USD/CAD moves downward to near 1.3470 during the Asian session on Thursday, extending its losses for the second successive day. The Canadian Dollar (CAD) likely found support from rising Crude oil prices.
West Texas Intermediate (WTI) crude oil prices edge higher, reaching close to $81.70 by the time of reporting. This increase may have bolstered the CAD, as the United States (US) Energy Information Administration (EIA) announced a second consecutive week of declines in Crude inventories, indicating strong demand in the world's largest oil consumer.
Meanwhile, the Bank of Canada's (BoC) Governing Council is considering potential rate cuts in 2024 should economic conditions align with forecasts. However, internal disagreements persist regarding the timing of such cuts and the risks associated with inflation. Governor Tiff Macklem remains cautious about immediate rate adjustments, citing concerns over underlying inflationary pressures.
At the time of writing, the US Dollar Index (DXY) has declined to approximately 103.20, primarily driven by weaker US Treasury yields. Yields for 2-year and 10-year bond coupons have fallen to 4.58% and 4.25%, respectively. This decrease can be attributed to the US Federal Reserve's (Fed) reaffirmation of expectations for three interest rate cuts this year.
The Federal Reserve maintained its interest rates at 5.5% during Wednesday's policy meeting. Investor sentiment continues to indicate expectations of additional easing measures in 2024, despite the Federal Open Market Committee (FOMC) projecting stronger growth throughout 2024 and 2025 than initially anticipated.
Notably, the FOMC's Dot Plot of interest rate expectations has shown an increase in the long tail end of the curve. Rates are now forecasted to reach approximately 3.1% by the end of 2026, compared to the previous projection of 2.9%.
The firm USD/CAD undertone persists. Economists at Scotiabank analyze the pair’s outlook.
Seasonal trends turn more constructive for the CAD in Q2 typically. Over the past 25 years, April has delivered the largest, average monthly gain for the CAD versus the USD of the calendar year (+1.1%, according to Blomberg data).
A clear push through 1.3620/1.3625 would sustain the uptrend in USD/CAD and put a retest of the low 1.3700 area on the radar.
Key short-term support remains at 1.3550.
The USD/CAD pair continues its rally, reaching the upper 1.3500s on Wednesday, after the release of softer-than-expected inflation data for February gives the Bank of Canada scope to ease policy in the future.
Easier monetary policy usually means lower interest rates which are negative for a currency as they reduce foreign capital inflows.
The headline Consumer Price Index (CPI) in Canada rose 2.8% YoY in February, which was below economists’ expectations of 3.1% and the previous month’s 2.9%, according to Statistics Canada.
Monthly headline CPI rose 0.3% which was below economists’ estimates of 0.6% but above the 0.0% of January.
Canadian Core CPI rose 2.1% in February compared to 2.4% in January. On a monthly basis, Core CPI increased 0.1%, the same as in January.
The data indicates that the Bank of Canada could tweak its language at the the next meeting in April to sound more dovish, with negative implications for the Canadian Dollar (CAD), but positive for the USD/CAD pair.
“The 3 mma measures of inflation have softened considerably over the last two months. While an encouraging development that could lead to incrementally more dovish language from the BoC at its upcoming 10-April meeting, we still see hopes for an imminent rate cut as premature.” Says David Doyle, head of economics at Macquarie.
USD/CAD is expected to undergo volatility later in the day when the Federal Reserve wraps up its March policy meeting and announces its decisions at 18:00 GMT.
The Federal Reserve (Fed) is not expected to alter interest rates but there is a chance it could revise its quarterly forecasts and accompanying statement. This could change the outlook for interest rates and therefore the US Dollar (USD) valuation.
There is increasing speculation that the Fed will revise its economic forecasts in the Summary of Economic Projections (SEP) and the “dot plot”, a chart which reflects the Board of Governors’ consensus expectations of the future path of interest rates.
In the December SEP, officials forecast three 25 basis points (0.25%) rate cuts in 2024 but some analysts now think there is a risk that this could be revised down to two 25 bps cuts to reflect inflationary pressures remaining elevated.
Nordea Bank, for example, said in a recent note that, “the Fed will likely need to revise its growth and inflation projections higher for 2024. This could lead to a median FOMC dot plot that shows only two rate cuts this year compared to the latest projection for three rate cuts, made in December 2023.”
Such a move would be positive for USD and USD/CAD, leading to further upside for the pair.
The USD/CAD pair gains momentum above the mid-1.3500s during the early Asian trading hours on Wednesday. The uptick of the pair is bolstered by the firmer US Dollar (USD) and cooler-than-expected Canadian Consumer Price Index (CPI) inflation data. Investors will closely monitor the Federal Reserve interest rate decision on Wednesday, with no change in rate expected. At the press time, the pair is trading at 1.3578, up 0.09% on the day.
The Fed is likely to keep rates at a two-decade high in a range of 5.25% to 5.5% at its two-day policy meeting on Wednesday and stay focused on sticky inflation. According to the CME FedWatch Tool, markets have priced in three quarter-point rate cuts this year, with 63% odds that they will begin in June
About the data, the US Census Bureau revealed on Tuesday that New Home Sales improved to 10.7% MoM in February from a 12.3% fall in January. Meanwhile, Building Permits rose to 1.9% from the previous reading of a 0.3% decline.
On the other hand, weaker-than-expected Canada’s CPI inflation data boosted expectations for a June rate cut from the Bank of Canada (BoC), which exerts some selling pressure on the Canadian Dollar (CAD). Following the data, money markets have priced in a 75% chance that the BoC will start cutting rates in June, up from 50% before the release.
On Tuesday, the headline Canadian CPI figure rose 2.8% YoY in February, while the Core CPI figure eased to 2.1% in February from 2.4% in January. On a monthly basis, the CPI figure climbed 0.3% MoM compared to expectations for a 0.6% increase.
Looking ahead, the Fed's monetary policy on Wednesday will take center stage. Fed Chair Jerome Powell will hold a press conference 30 minutes later, which might provide information on the central bank's outlook. On Thursday, the BoC Summary of Deliberations and Canada’s housing data will be released.
The USD/CAD climbed during the North American session, though it slipped below the 1.3600 figure after data from Canada suggested the disinflationary process continued. At the time of writing, the pair exchanges hands at 1.3565 after hitting a new year-to-date (YTD) high of 1.3613.
Canada’s economic docket featured the release of inflation data, which decreased below the 3% threshold on annual figures. On a monthly basis, the Consumer Price Index (CPI) saw a 0.3% rise, below the consensus of 0.6%. The Bank of Canada’s (BoC) preferred measure of inflation, the core CPI, slowed in the 12 months to February, from 2.4% to 2.1%.
The data sent the USD/CAD rallying amid speculations that the BoC might cut rates sooner than expected. In the meantime, money market futures data suggest that the odds for the first rate cut by the BoC in the June meeting lie at 73.0%, according to Capital Edge and Refinitiv data.
The US housing sector shows signs of strengthening according to recent economic data. Building Permits in February rose by 1.9% month-over-month, from 1.489 million to 1.496 million. Meanwhile, Housing Starts for the same period saw a significant increase of 10.7%, surpassing the expected 8.2%.
USD/CAD traders brace for Wednesday’s Federal Open Market Committee (FOMC) decision. Futures data shows that the Fed holding rates are unchanged, though uncertainty lies in the update of their Summary of Economic Projections (SEP). Some analysts suggest Fed policymakers could disregard one rate cut, keeping rates higher for longer.
After reaching a new YTD high, the USD/CAD retreated below the 1.3600 mark. If the pair closes below the 1.3550 area, that will form an ‘inverted hammer’ opening the door for further losses, but the 100-day moving average (DMA) at 1.3520, a dynamic support level, could cap the losses. Further downside is seen at 1.3500 and at the confluence of the 200 and 50-DMA at 1.3481/87. On the other hand, if buyers come back and reclaim 1.3600, look for a challenge of the November 24 high at 1.3711.
The USD/CAD pair soars above the round-level resistance of 1.3600 in the early New York session on Tuesday. The Loonie asset strengthens as the Canadian Consumer Price Index (CPI) for February turns out surprisingly softer than expected.
The annual headline CPI grew at a slower pace of 2.8% than expectations of 3.1% and the former reading of 2.9%. On a monthly basis, the headline CPI rose by 0.3% against the expectation of 0.6%. The Bank of Canada’s (BoC) preferred inflation measure, which strips of eight volatile items grew at a steady pace of 0.1% monthly. The underlying inflation decelerated to 2.1% from 2.4% in January.
The soft inflation data could prompt expectations that the BoC will reduce interest rates sooner than expected. When the BoC considers reducing interest rates, the Canadian dollar faces liquidity outflows.
Meanwhile, the Canadian Dollar has also been weighed down by dismal market sentiment. The appeal for risk-perceived assets weakens amid uncertainty ahead of the Federal Reserve’s (Fed) interest rate decision, which will be announced on Wednesday. The Fed is expected to keep interest rates unchanged in the range of 5.25%-5.50%. The US Dollar Index (DXY) rises to 103.85 as demand for safe-haven assets improves.
Apart from the Fed’s policy decision, investors will focus on the dot plot and economic projections. The dot plot shows policymakers' interest rate projections for different timeframes.
The USD/CAD pair jumps to 1.3550 in Tuesday’s European session after breaking above the two-day consolidation formed in a range of 1.3510-1.3550. The Loonie asset advances as uncertainty ahead of key events has dampened risk appetite of market participants.
S&P500 futures have generated nominal losses in the London session, indicating a risk-aversion mood. The US Dollar Index (DXY) continues its winning spell for the fourth trading session and refreshes its weekly high at 103.87 amid uncertainty ahead of the interest rate decision by the Federal Reserve (Fed), which will be announced on Wednesday.
The CME FedWatch tool shows that the central bank is certain to keep interest rates unchanged in the range of 5.25%-5.50%. Investors will focus on cues about rate cuts by the Fed, which are currently expected in the June policy meeting.
Meanwhile, the next move in the Canadian Dollar will be guided by Canada’s Consumer Price Index (CPI) data for February, which will be published at 12:30 GMT. Annual headline inflation is expected to have grown at a higher pace of 3.1% compared to 2.9% recorded for January.
USD/CAD approaches the horizontal resistance of the Ascending Triangle pattern formed on a daily timeframe, plotted from December 7 high at 1.3620. The upward-sloping border of the aforementioned pattern is placed from December 27 low at 1.3177. The chart pattern exhibits a sharp volatility contraction.
The near-term appeal is bullish, as the 20-day Exponential Moving Average (EMA) near 1.3520 continues to support the US Dollar bulls.
The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among investors.
The Loonie asset would observe a fresh upside if it breaks above December 7 high at 1.3620. This will drive the asset towards May 26 high at 1.3655, followed by the round-level resistance of 1.3700.
On the flip side, a downside move below February 22 low at 1.3441 would expose the asset to February 9 low at 1.3413. A breakdown below the latter would extend downside towards January 15 low at 1.3382.
USD/CAD continues its upward trend for the fourth consecutive session, trading near the significant level of 1.3540. The US Dollar (USD) advances, propelled by higher US Treasury yields. Bond markets are facing selling pressure as additional signs of resilience in the United States (US) economy emerge, prompting traders to revise their expectations for fewer interest rate cuts this year.
According to the CME FedWatch Tool, the probability of a rate cut in March stands at 1.0%, and 8.7% for May. The likelihood of rate cuts in June and July is lower, at 55.1% and 73.7%, respectively.
The US Dollar Index (DXY) continues its upward trajectory, with 2-year and 10-year US yields at 4.73% and 4.32%, respectively. Investors are eagerly awaiting the interest rate decision from the US Federal Reserve (Fed), expected to be announced on Wednesday. The Fed is anticipated to uphold its elevated interest rates in response to recent inflationary pressures.
The Canadian Dollar (CAD) might have found support from the surge in Crude oil prices, considering Canada's status as the largest oil exporter to the United States (US). West Texas Intermediate (WTI) hovers around $82.10 per barrel, nearing its highest levels since early November, bolstered by ongoing supply-side worries.
On Monday, the Canadian stock market closed slightly lower as investors awaited Canada's Consumer Price Index (CPI) data scheduled for Tuesday. There are expectations for an uptick in Canadian consumer prices.
USD/CAD trades little changed. Economists at Scotiabank analyze the pair’s outlook.
Canada releases CPI data on Tuesday. These are expected to reflect an uptick in headline prices and sticky core inflation. Meanwhile, Wednesday’s minutes of the BoC’s last rate decision may underscore policymakers concern about slow progress on disinflation.
The CAD could pick up a little support if inflation pressures remain elevated (but might also slip back, all else equal, if Retail Sales data Friday are soft, as the consensus estimate anticipates).
The USD’s uptrend persists on the face of it, but gains have flattened out since the middle of last week, with the USD firmly capped in the mid-1.3500s.
Support is 1.3510 and, stronger, at 1.3485 on the intraday chart.
The USD/CAD pair seems comfortable above the psychological resistance of 1.3500 in the European session on Monday. The Loonie asset clings to gains amid uncertainty ahead of the interest rate decision by the Federal Reserve (Fed), which will be announced on Wednesday.
While the Fed is certain to keep interest rates unchanged in the range of 5.25%-5.50%, market participants will keenly focus on the release of the dot plot, which details policymakers’ projections for interest rates over time and the latest economic projections.
The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, drops slightly to 103.40, while the Loonie asset is positive, indicating weakness in the Canadian Dollar.
The Canadian Dollar has come under pressure ahead of the February inflation data, which will be published on Tuesday. The annual headline Consumer Price Index (CPI) is anticipated to have accelerated to 3.1% from 2.9% in January. Hotter-than-anticipated inflation data will delay the Bank of Canada’s (BoC) plans to reduce interest rates.
USD/CAD trades inside Friday’s trading range around 1.3540. Earlier, the Loonie asset rebounded from the upward-sloping border of the Ascending Triangle pattern formed on a daily timeframe, plotted from the December 27 low at 1.3177. The horizontal resistance of the aforementioned pattern is placed from December 7 high at 1.3620.
The 50-day Exponential Moving Average (EMA) near 1.3500 continues to support the US Dollar bulls.
The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 region, which indicates indecisiveness among investors.
The fresh upside would appear if the asset breaks above the December 7 high at 1.3620, which will drive the asset towards the May 26 high at 1.3655, followed by the round-level resistance of 1.3700.
On the flip side, a downside move below February 22 low at 1.3441 would expose the asset to February 9 low at 1.3413. A breakdown below the latter would extend downside towards January 15 low at 1.3382.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.