- USD / CAD is at eight week highs and is testing 1.2700 amid USD strength after Powell’s renomination.
- The lack of major Canadian economic events this week means that the pair will be driven by oil, risk appetite and the dynamics of the US dollar.
The USD / CAD It flew to fresh eight-week highs on Monday, as it briefly moved above the 1.2700 level for the first time since early October. At current levels near 1.2700, the pair is trading higher just below 0.5% on the day. Now that resistance at the 1.2650 zone has been convincingly broken and the pair is already at 1.2700, the next logical stop on the upside would be the September 29 high of 1.2770. Conversely, any pullback to the downside may find buyer interest at 1.2650 and then around 1.2600 again.
The bullish move was fueled by the widespread strengthening of the US dollar against all of its major counterparts after news broke of Jerome Powell’s appointment as Fed chairman. With the loonie around 0.5% lower on the day against the dollar, that puts it in line with the losses seen by most of its other G10 counterparts on the day against the dollar. GBP and EUR were down 0.4%, CHF, CAD and NZD down 0.5% and JPY down 0.8%. Oil prices were oscillating throughout the day and although it finally ended the session with reasonable gains, it did little to help the loonie.
Other than the speech by Bank of Canada Deputy Governor Paul Beaudry, there is very little interest in the Canadian economic calendar this week. That means USD / CAD will likely be driven by oil, risk appetite, and the dynamics of the US dollar. In that sense, US economic events are predominantly concentrated on Tuesday and Wednesday, given that Thursday is the Thanksgiving holiday, with traders focused on US flash PMIs, goods orders Durable and core PCE inflation data for October.
Technical levels
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