USD/CAD meeting sellers on spikes [Video]
|Expect USD/CAD sellers
The CAD has been strongly supported over the last 24 hours after a bullish shift from the Bank of Canada. The CAD rose by its most since June 2020 against the USD. The Bank of Canada is now the first central bank to exit its stimulus program after it announced that asset purchases would be reduced from $4 billion a week down to $3billion a week. On top of this, the BoC brought forward its guidance expecting an interest rate rise in 2022 vs expectation of rate rise in 2023.
The USD is weak at the moment as the US 10 year yields have failed to rise despite a good run of recent US data including a stronger than expected US CPI print, US retail sales, NFP data, PMI manufacturing and services data. Many analysts and investors still see the medium-term outlook for the USD as bearish.
In these conditions expect USDCAD sellers on rallies.
Key trade risks
-
Any further rise in Canadian COVID-19 cases will put a strain on this bullish outlook.
-
Any sharp falls in the oil markets on rising COVID-19 cases will weaken CAD.
-
If the FOMC meets next week and announce bond tapering, that will support the USD.
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.