Top Ad unit 728 × 90

Breaking News


USD/CAD surges above 1.3500 as US economic data trumps growth worries

featured image
  • USD/CAD extended its gain in the week, bolstered by April’s PMIs reaching expansionary territory.
  • The Canadian Dollar weakened as Retail Sales sank, though above estimates.
  • USD/CAD Price Analysis: Bullish above 1.3520; otherwise, sellers could retest 1.3500.

The USD/CAD reclaims the 1.3500 figure, advances after optimistic economic data in the US, pushed back against worries about growth. Meanwhile, Canadian Retail Sales missed estimates, indicating a slowdown in the economy. Hence, the USD/CAD is trading at 1.3532 after traveling to a low of 1.3468.

USD/CAD underpinned by upbeat US PMIs

Wall Street continued to trade with losses after S&P Global reported that the activity of businesses in the United States (US) jumped. On its final reading, April’s S&P Global Manufacturing and Services PMIs rose above estimates at expansionary territory. Consequently, the Composite Index in the previous reading was 53.5, above 52.3.

Therefore, the USD/CAD rose sharply to the daily high above the R4  pivot point at 1.3558 before retracing to the R3 pivot at 1.3535. US bond yields edged up on growing concerns that business activity improvement could impact inflation to the upside, warranting higher interest rates.

The US Dollar Index, a gauge for the buck’s value against six currencies, erased some of its previous day losses, up 0.03%, at 101.825, a tailwind for the USD/CAD.

On Thursday, Federal Reserve policymakers continued their hawkish rhetoric. Philadelphia Fed President Patrick Harker suggested the US central bank is close to ending its campaign to control inflation. At the same time, Cleveland’s Loretta Mester believes rates should go above 5% due to high inflation. The current benchmark rate is between 4.75% and 5%.

On the Canadian front, Retail Sales for February plunged but were above forecasts of 0.6% MoM contraction, which stood at -0.2%, according to Statistics Canada. The data reinforce the Bank of Canada’s (BoC) decision to keep rates unchanged at their latest meeting.

Investors brace for further Fed tightening

The CME FedWatch Tool, which forecasts the next move of the US Federal Reserve (Fed), keeps odds at 88% for a 25 bps rate hike at the May 2-3 meeting.

The US economic docket will feature the Federal Reserve Governor Lisa Cook will cross newswires ahead of the media blackout that Fed officials would begin, ending with the Fed Chair Powell press conference on May 3.

USD/CAD Technical Analysis

USD/CAD Daily Chart

The USD/CAD extended its rally to four out of five days a week, clearing on its uptrend, the 20, 100, and 50-day Exponential Moving Averages, each at 1.3488, 1.3501, and 1.3524, respectively. The Relative Strength Index (RSI) also crossed into bullish territory, suggesting further Canadian Dollar (CAD) weakness, meaning USD/CAD upside. If USD/CAD achieves a daily close above the 50-day EMA, the pair’s next resistance would be a ten-month-old prior’s support turned resistance trendline at around 1.3560-70. Once cleared, the next resistance would be 1.3600. Conversely, the USD/CAD could dive towards the 100-day EMA at 1.3501 before extending its losses towards the 20-day EMA at 1.3488.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Read More

USD/CAD surges above 1.3500 as US economic data trumps growth worries Reviewed by RP on April 22, 2023 Rating: 5

No comments:

Contact Form


Email *

Message *

Powered by Blogger.