- The USD / CAD decline is followed by the decline in the dollar and generally stronger commodity prices in the month of April and May.
At the time of writing this report, the USD / CAD It is trading at 1.2084 and is down 0.3% after going from a high of 1.2103 to a low of 1.2080.
The dollar has been on the defensive since May 5 and was hit further on Friday due to disappointment in the nonfarm payroll report.
The United States created just over a quarter of the jobs that economists had predicted last month.
On top of that, the unemployment rate rose unexpectedly, leaving the market speculating that the Fed will not seek to cut or raise rates sooner than they had already communicated.
The report encouraged investors to undo their growing long positions in the US dollar and go for riskier asset classes, such as stocks.
The DXY dollar index, which measures the dollar against six rivals, stands at 90.13 at time of writing, virtually flat on the day, after falling as low as 90.128 for the first time since Feb. 26 at the start of the session. .
The dollar is training at odds with the broader spectrum of markets with global stock price offerings and even with U.S. Treasury yields well above Friday’s lows with ten-year yields rising. 0.6% at the time of writing this article.
Meanwhile, the loonie has benefited from the Bank of Canada’s recent change in policy settings, higher commodity prices, and general risk markets.
The CAD may remain strong, primarily based on divergent outlook for monetary policy within the dollar bloc.
The BoC has already started to reduce its asset purchases and has even signaled that it could increase as early as 2022, or at least from when the output gap is significantly smaller.
USD / CAD technical analysis
USD / CAD is down 4.6% since March.
The loonie is now facing USD / CAD bulls at multi-year lows as follows:
While there are prospects for a deeper extension into demand territory, a correction may not be far off.
From a daily perspective, the 61.8% Fib retracement of the last bearish impulse lines up with the previous lows as follows:
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