- USD / CAD momentarily rose to the 1.2700 level, but has since retreated to the mid-1.2600 level.
- Consolidation conditions are not surprising given the key risk events in the US and Canada later in the week.
The USD / CAD It has retraced from the previous session’s highs at the 1.2700 level, with sellers interested in keeping the pair below the big figure before the pair’s 50-day moving average, which is currently at 1.2709. If the bulls regain control and carry USD / CAD above 1.2700, it is worth noting significant resistance at 1.2740-1.2750 (the highs of early March and late February).
But right now, USD / CAD is content to consolidate around 1.2650, very close to its 21-day moving average at 1.2659. On the day, the pair was up a modest 0.1% or around 10 pips.
Performance of the day
Consolidated trade on Monday is not a surprise given 1) the lack of new fundamental catalysts (aside from the news that the Senate approved US President Joe Biden’s $ 1.9 trillion stimulus package over the weekend, as expected) and 2) caution ahead of key events later in the week on both sides of the US-Canada border. Crude oil markets have been lagging in recent hours, with traders apparently posting some gains with WTI and Brent prices at cycle highs, although this does not appear to have affected the Canadian dollar at all.
Next week
Starting with key events in the United States; With all the recent focus on rising bond yields and expectations of higher inflation, the release of Wednesday’s consumer price inflation data for February and the 10-year government bond auction will be in focus. . If the former is stronger than expected and the latter shows lower-than-expected demand for US government debt, this would provide further impetus to the recent upward movement in bond yields and would likely be bullish for the USD. Meanwhile, weekly US jobless claims on Thursday and Michigan producer price inflation and consumer sentiment on Friday will also be in the limelight.
Moving on to key events in Canada; On Wednesday, the Bank of Canada announced its latest monetary policy decision. Consensus expectations are that the bank’s next move will be a reversal of its QE program, given recent positives in the form of rising oil prices (good for Canada’s energy sector) and better than expected containment of the pandemic. the expected. But ING maintains that the bank will be patient; “In the midst of a fierce bond sell-off, Governor Tiff Macklem will likely have no interest in endorsing any downsizing expectations … We hope the BoC’s message is broadly in line with recent Fed rhetoric: emphasizing that monetary stimulus It is here to stay ”.
BoC Lieutenant Governor Lawrence Schembri will speak Thursday and give color to the decision on rates. Stats Canada to Release February Labor Market Report on Friday; ING believes that “the February employment figures may continue to be higher than the US and maintain the national narrative in favor of CAD.”
Technical Levels
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