USDCAD steamed to a 9-month high?
|USDCAD, Weekly
USDCAD steamed to a nine-month high at 1.3072, extending the run higher from sub-1.2250 levels that were seen in early February. The Canadian dollar has been underperforming amid worries about the NAFTA negotiation and after BoC Governor Poloz said on Tuesday that the unwinding of monetary stimulus would “remain cautious.” Tariff and NAFTA worries remained palpable and contributed to some risk-off flows, while the double blow of a miss in Canadian exiting sales ysterday along with Trump tweeting out — Canada’s trade surplus with the U.S, are the reason for CAD’s sharp weakness.
Meanwhile, yesterday the Mexico economy minister Guajardo stated that, Mexico and Canada can make a deal on NAFTA without the U.S., which must decide if it’s in or out. That doesn’t sound like negotiations are going very well, though Trump tweeted that the U.S. continues to negotiate with Canada on the trade surplus. Both the CAD and MXP continue to be weaken so far today. The trade cudgel continues to be welded by Trump, keeping the NAFTA markets nervous. It remains to be seen if NEC director nominee Kudlow can help manage the fraught process.
Oil prices have also been trading on the softer side, while we anticipate that Canadian Dollar will continue weakening, with next resistances coming at 1.3080, 1.3140 and 1.3200. A consolidation above 1.3030 is likely to be seen today, before another attempt higher. Technically Loonie remains in an uptrend, which has been in play since late January. It managed to break December’s Fractal high, and the 20-Months Moving average. Hence ti currently moving above all 3 MAs. Trend support comes in at 1.2975.
Nevertheless, Weekly and Daily Momentum Indicators indicating that there is further space upwards , with RSI pointing upwards at 62, and Stochastic crossing into overbought Territory but still at 76. The MACD lines just turned positive in Weekly basis, while in the Daily fluctuating above neutral, suggesting Strong positive momentum.
In Short-term, a break today above latest high at 1.3070, could triggered a long position with target at the immediate resistance level at 1.3797, with support at 1.3055.
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