In foreign exchange, the USD/CAD pair has recently vaulted beyond the 1.3400 mark, primarily driven by a blend of softer market sentiment and a downtrend in oil prices.
Market Sentiment and the US Dollar
As we delve into Monday’s European trading session, the US Dollar is making notable strides. A shift in market mood, characterized by a downturn in equity markets following an initially upbeat opening, coupled with diminishing oil prices, is propelling the currency pair upwards.
Investors appear to be adapting to Friday’s unexpectedly subdued US Producer Price Index (PPI) data. This adaptation occurs amidst a relatively quiet trading atmosphere, further amplified by the closure of US stock markets due to a banking holiday. This scenario has set the stage for a rather erratic and fluctuating trading environment.
A key factor exacerbating this trend is the decline in oil prices, a crucial export for Canada. After peaking above $75 on Friday, oil prices are in a regression phase, exerting additional downward pressure on the Canadian Dollar (CAD).
Canada’s Economic Indicators
Looking ahead, today’s economic agenda holds potential catalysts for the CAD. The Bank of Canada’s Business Outlook Survey, alongside data on manufacturing sales, could support the beleaguered currency. Attention will also be directed towards Tuesday’s release of Canadian CPI data, which is anticipated to provide fresh insights into the Bank of Canada’s (BoC) monetary policy, especially leading up to Friday’s retail sales figures.
On the United States’ front, key economic indicators to watch this week include Wednesday’s US Retail Sales and the Michigan Consumer Sentiment Index slated for release on Friday.
Technical Analysis of USD/CAD
From a technical standpoint, the US Dollar is gaining bullish momentum, eyeing the 1.3455 level, representing the 61.8% retracement of the December downturn. Surpassing this, the currency pair could encounter resistance at 1.3480 and 1.3545. On the flip side, support levels are observed at 1.3375 and 1.3335.
