USD/CAD Outlook – Assist Creaking as US Greenback Weak spot Continues

Canadian Greenback Worth (USD/CAD), Information, and Evaluation:

• 14-month USD/CAD sell-off on maintain for now.
• Financial institution of Canada (BoC) governor Tiff Macklem reiterates the necessity for tapering.

The Canadian greenback’s appreciation in opposition to the US greenback has come to a grinding halt simply above 1.2000 as greater oil costs and a weaker US greenback proceed to maintain downward strain on USD/CAD. The 14-month slide within the pair, boosted by the Financial institution of Canada’s determination to pare again its bond purchases final month, is now at a important chart degree with little technical assist seen beneath 1.2000. Whereas the chart means that the pair’s slide might proceed, the central financial institution might must stall any transfer decrease to assist maintain Canadian exports engaging to its neighbor and maintain the financial restoration on observe. Governor Macklem additionally reiterated that the central financial institution will proceed to assist the financial system, and never increase rates of interest till the roles market grows to above pre-pandemic ranges, whereas inflation must sustainably meet the central financial institution’s 2% goal.

Whereas the Canadian greenback stays boosted by the nation’s ongoing financial restoration, the US greenback continues to slip decrease. The US greenback basket (DXY) can also be buying and selling simply above a important assist degree at 89.16 with a break beneath exposing ranges final seen practically three years in the past.

US Greenback Basket (DXY) Each day Worth Chart

Whereas the chart set-up stays bearish, it could be that this transfer decrease is coming to an finish. The basics we now have already talked about will give the pair some assist, and additional weak point could also be tempered from right here, particularly if the Canadian export sector begins to undergo. This week sees some excessive significance US knowledge releases and these needs to be watched carefully for any clues into the power of the US financial system and the US greenback.

For all market-moving knowledge releases, see the DailyFX Financial Calendar

USD/CAD Each day Worth Chart

IG Retail dealer knowledge present 80.16% of merchants are net-long with the ratio of merchants lengthy to quick at 4.04 to 1. We usually take a contrarian view to crowd sentiment, and the very fact merchants are net-long suggests USD/CAD costs might proceed to fall.

Positioning is much less net-long than yesterday however extra net-long from final week. The mix of present sentiment and up to date modifications offers us a additional blended USD/CAD buying and selling bias.

What’s your view on USD/CAD – bullish or bearish?? You may tell us by way of the shape on the finish of this piece or you possibly can contact the writer by way of Twitter @nickcawley1.