USD/CAD inter-markets: keeping an eye on US
|Spot has resumed the upside on Tuesday, mainly bolstered by a better tone around the greenback, while CAD’s outlook remains fragile, particularly following the recent steady stance from the Bank of Canada and after President D.Trump took office.
CAD appears somewhat decoupled from crude oil dynamics in recent weeks, paying more attention instead to the yield spread differentials between in the US and Canadian money markets, especially in the shorter end of the curve. That said, the monetary policy divergence between the Fed and the BoC has thus taken the driver’s seat as the main driver in the pair’s price action, at least for the time being.
Adding to CAD jitters, President Trump signed on Monday an executive order to renegotiate the NAFTA, while uncertainty over further economic measures and their impact on the buck remains on the rise.
In the meantime, the constructive outlook on the greenback – gauged by the US Dollar Index (DXY) – stays unchanged as long as the 8-month support line holds (today at 97.10), while the psychological support at the 100.00 handle has proven to be a tough barrier for sellers so far. USD/CAD seems to have found solid support around last week’s lows in the 1.3000 neighbourhood, and has staged quite a significant rebound since then. The next hurdle emerges at levels just below the 1.3400 limestone, with no further relevant resistance levels until December tops in the 1.3600 region.
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.