- USD/CAD remains well supported above the 200 DMA at 1.2500 as risk aversion flows cap the Canadian dollar higher.
- Weak Canadian Retail Sales data and the New Home Price Index have not moved the loonie.
- Markets are focused on next week’s Fed and BoC meetings.
The USD / CAD has remained well supported above its 200 day moving average at 1.2500 as risk aversion flows into global equities and profit taking in crude oil limit demand for risk sensitive currencies/commodities such as the Canadian dollar. At current levels near 1.2520, the pair is trading with very modest gains of around 0.1% on the day, with the loonie outperforming its peers on the session.
But the pair continues to trade well within the 1.2450-1.2550 range that has prevailed for the last six sessions. The broad rally in the US dollar this week has prevented the Canadian dollar from taking advantage of higher crude oil prices and raised expectations of an imminent BoC policy tightening.
The Canadian dollar did not react to the latest Canadian Retail Sales or New Home Price Index figures. The former showed sales growing at a slower-than-expected 0.7% mom in November, while Statistic Canada’s flash estimate for December showed a 2.1% mom drop, likely fueled by rising Omicron infections. last month. Meanwhile, the New Home Price Index also grew at a slower-than-expected MoM pace of 0.2% vs. forecasts of 1.0%.
There is a few more data on the calendar on Friday to get traders excited, though it might be worth taking a look at the release of the US December leading index at 15:00 GMT and the Treasury Secretary’s speech. from the USA, Janet Yellen, at 16:30 GMT. Next week, the Fed and BoC policy announcements on Wednesday will be the key events for USD/CAD traders to watch, although the US PMIs will also be figures to watch for market participants. .