Categories: Markets

USD / CAD spreads losses since it returned below 1.2800

  • USD / CAD losses have accelerated in recent trading as the USD continues to weaken.
  • The bears will be on the lookout for a test of yearly lows just below the 1.2700 psychological level.

He USD / CAD has been on the defensive so far on Wednesday, the pair fell from above the 1.2800 level in Asia Pacific trading to 1.2750 recently. The move is being driven by a weakening of the US dollar as opposed to the strength of the Canadian dollar; The CAD is currently near the center of the G10 FX performance chart, up around 0.5% on the day against the dollar. USD / CAD is suffering losses of around 60 pips, and the bears are expecting a move back towards yearly lows just below 1.2700, potentially before the end of the year.

Fundamental considerations for USD / CAD …

There hasn’t been much when it comes to major Canadian fundamental developments (things have been quiet on Canadian economic data, the BoC, and political fronts). USD / CAD is much more focused on events south of the border; If the US Senate can pass an additional $ 1,400 in stimulus checks, increasing the total stimulus check to $ 2,000, this bodes well for the US economy and for the Canadian export sector, which is heavily exposed to the United States. .

It seems that this bill, which has already been approved in the House, will be stalled in the Senate for at least a few more days before it is voted; Most likely, Senate Republican Majority Leader Mitch McConnell will try to delay voting on the bill until after the January 5 runoff election in Georgia. This tactic could well backfire on Republicans if Americans desperate for government financial aid lose heart and give them a Democratic victory; a Congress controlled by Democrats would likely inject trillions of additional stimulus in 2021.

Stimulus issues and Senate elections will continue to be relevant for USD / CAD in 2021, as will the dynamics of the crude oil market; Despite Europe and the US increasingly shutting down again to slow the spread of the virus (hurting fuel demand), crude oil markets remain close to recent highs, supported by hopes of vaccinations However, the fact that OPEC + is still on track to ease the January supply cuts despite falling short-term demand could be worrisome. Any crude weakness could slow down the pace of the USD / CAD depreciation.

Technical levels

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