untitled design

USD / CAD sets new weekly lows around 1.3050 amid risk appetite

  • Improving risk appetite / higher crude prices has pushed USD / CAD to fresh lows for the week around 1.3050.
  • Amid mild USD conditions, the loonie looks further lower and a test of 1.3000.

The USD / CAD has retreated to fresh week lows of around 1.3050 in recent trading, the pair is now suffering losses of more than 50 pips or 0.4% on the day.

CAD: between risk sentiment, crude prices

Wednesday’s European session saw an improvement in risk appetite following Tuesday’s risk aversion, with major European stock exchanges closing with reasonable gains on the day and returning to recent highs, and crude oil markets as well. made solid gains on the upside. US stocks are also profitable, albeit more modest.

The improvement in sentiment has given a boost to more risk-sensitive currencies (CAD included), and was partly assisted by another vaccine update from Pfizer at the end of the European morning session; The US pharmaceutical giant announced that the final results of the phase 3 trial showed that the vaccine was 95% effective (compared to the previous estimate that the vaccine was 09% effective) and this is consistent in all ages and ethnicities.

The stronger-than-expected Canadian inflation figures for October, released at 13:30 GMT, failed to elicit a positive reaction at the time. As with previous UK CPI data, inflation in Canada remains well below the Bank of Canada’s 2% target.

With Canadian data out of the way, the loonie is expected to continue to trade based on broader themes and risk appetite ahead of Canadian retail sales on Friday.

USD / CAD prepares to continue gradual decline amid mild USD selling conditions

The USD continues to lose ground, with the dollar index trading down about 0.2% or 20 points on the day, driven lower by the market’s still buoyant risk appetite, as well as recent dovish speeches from the President from the FOMC, Powell, Vice President Clarida and more. In that vein, the Fed’s speaker list on Wednesday night is likely to reiterate a dovish message of 1) pessimism about the economy’s short-term outlook, 2) the need for fiscal stimulus, and 3) the fact that ultra-flexible monetary policy and credit facilities are going nowhere anytime soon, and the Fed maintains the option to do more if necessary.

Hence, the USD appears poised for a further decline and the CAD, given its risk-sensitive properties, appears to be a beneficiary of this.

Technically speaking, the image also looks pretty subdued; USD / CAD has been trending down within a downtrend channel for the past few days (since it rejected a test of its 21 DMAs to the upside at 1.3150 last Friday). The next key support area on the downside is the 1.3000 psychological area, followed by November lows of just under 1.2950.

If the USD / CAD bulls can come back and push the cross above 1.3100 and force a breakout of the pair’s recent downtrend channel, the door will open for a test of weekly highs around 1.3120 and then the pair’s 21 days. . moving average at 1.3144.

4 hour chart

.

You may also like

Get the latest

Stay Informed: Get the Latest Updates and Insights

 

Most popular