- The loonie among the weakest in the G10 on Monday.
- USD/CAD at highs since December 2021.
- Risk aversion, falling oil prices and firm dollar drive the pair.
The USD/CAD is trading around 1.2900, having reached 1.2905, the highest intraday level since Dec 22, 2021. From Friday’s low, the pair bounced 200 pips.
The pair’s gains are fueled by falling oil prices, risk aversion, a firm dollar and technical factors. The barrel of WTI loses more than 2% and struggles to hold above $100.00. For its part, Wall Street futures point to an opening with falls around 0.50%, after having a crash on Friday.
The negative climate intensified after data from China over the weekend that showed a larger-than-expected slowdown in the economy in April. On Monday there will be data on manufacturing activity from the US and Canada. Wednesday will be the meeting of the Federal Reserve.
The dollar remains solid and resumes gains overall after Friday’s break. DXY climbs 0.20%, and trades above 101.40, supported by a rise in Treasury bond yields. The 10-year rate is at 2.96%, just below this year’s high.
In turn, the break of 1.2900 of the USD/CAD if affirmed would give more impetus to the upside. The next strong resistance is in the 1.2945 area. Should it return below 1.2860, the bullish momentum would lose steam. Below is the support at 1.2795/1.2800.
Technical levels
Source: Fx Street
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