- USD/CAD has been trading two-way on Monday but is now back below 1.2700 as risk appetite improves.
- While geopolitics will be a key driver of USD/CAD sentiment going forward, this week’s data calendar is also very busy.
- Highlights include the BoC rate decision on Wednesday, Fed Chairman Powell’s testimony to Congress and the February US jobs report.
The USD/CAD has been trading mixed on Monday as investors digest the latest wave of Western sanctions against Russia over its military incursion into Ukraine, although the bears seem to have won the day for now. The pair briefly broke above the 1.2800 level during Asian trade as currency markets started the week in a risk-off mood amid contagion fears from the sanctions-induced Russian economic collapse and the disruption of the energy supply. But as energy prices rose and the general market mood improved amid hopes that Russia-Ukraine talks could lead to a ceasefire, the pair fell sharply to current levels near 1.2690. , where it is now trading around 0.1% lower on the day.
That leaves USD/CAD not much above this month’s lows at 1.2635, a big change from its highs just three days ago near 1.2900. Indeed, the pair is trading about 1.5% below last week’s highs and energy price tailwinds appear to be a major factor in Canadian dollar resilience. Geopolitics and the ongoing Russo-Ukrainian war will be a key driver of USD/CAD sentiment going forward, but traders will also be keeping an eye on a very busy economic calendar this week.
Canada’s fourth quarter GDP figures are due out on Tuesday, a day before the Bank of Canada’s expected 25 basis point rate hike on Wednesday. Meanwhile, US dollar traders will be watching the Fed talk with Fed Chairman Jerome Powell testifying before Congress on Wednesday and Thursday, and many other Fed policymakers will be in touch. As for the data, the US jobs report for February is due out on Friday, ahead of the February ISM PMI surveys on Tuesday and Thursday.
Additional technical levels
Source: Fx Street
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