- Weaker greenback stretches CAD beneficial properties.
- USD/CAD choice expiries might see CAD shut larger earlier than the Easter weekend.
USD/CAD Basic Backdrop
USD/CAD opened decrease this morning after falling U.S. Treasury yields (decreased outlook on U.S. inflation) led to a weaker greenback. Yesterday’s Financial institution of Canada (BoC) 50bps fee hike sparked a CAD rally clawing again current misplaced beneficial properties nonetheless, long-term I do favor the greenback as I don’t suppose the Canadian financial system can sustain with the Fed’s aggressive outlook. This could see the greenback bid in opposition to the loonie as we transfer additional into the rightening cycle.
Crude oil costs stay elevated however the affect on USD/CAD has diminished because the U.S. is at present a web producer of crude oil. That is evident in USD/CAD value motion whereby CAD is comparatively muted in comparison with earlier crude oil value surges.
Later at this time we have now just a few choice expiries (see particulars under) for the New York reduce. Typically talking, costs are likely to strategy the strike value on giant expiries because the reduce looms. At the moment USD/CAD is barely larger than the under strikes which might see a transfer decrease afterward the day.
- USD/CAD: 1.2550 (289M), 1.2560-70 (923M)
USD/CAD ECONOMIC CALENDAR
As we head into the Easter weekend, U.S. retail gross sales and client sentiment will shut out the week whereas subsequent week’s Canadian inflation will dominate headlines.
Supply: DailyFX Financial Calendar
USD/CAD DAILY CHART
Chart ready by Warren Venketas, IG
USD/CAD seems to be heading in the direction of a re-test of the 1.2500 psychological help one inside wat seems to be a forming bear flag. Brief-term this bearish outlook may be very doubtless however as talked about prior, USD upside is my most popular strategy past Q2.
Key resistance ranges:
- 1.2640/100-day EMA (yellow)
- 50-day EMA (blue)
- 20-day EMA (purple)
Key help ranges:
IG CLIENT SENTIMENT DATA: MIXED
IGCS reveals retail merchants are at present prominently LONG on USD/CAD, with 62% of merchants at present holding lengthy positions (as of this writing). At DailyFX we usually take a contrarian view to crowd sentiment however after current modifications in longs and shorts, sentiment reveals a watchful bias.
Contact and comply with Warren on Twitter: @WVenketas