USD/CAD trailing its commodity counterparts on BoC / Fed divergences?
|Currently, USD/CAD is trading at 1.3371, down -0.08% on the day, having posted a daily high at 1.3403 and low at 1.3354.
- OPEC March oil output falls 230,000 bpd month/month - Reuters
- WTI leaps to highs above $49.00 post-EIA
Despite the spike in WTI, the Candian dollar remains subdued within its bullish drift this week while its commodity-linked counterparts such as the Aussie outperform. AUD/CAD has risen from 1.0153 to 1.0250 this week so far. We await Friday’s GDP and next week’s Business Outlook Survey as the next catalyst but yesterday's comments from the BoC Gov. Poloz saw a reiteration of prior concerns with a focus on downside risks, excess capacity, and expectations for policy divergence between a tightening Fed and a neutral BoC, as noted by analysts at Scotiabank. "The next BoC policy decision (and MPR forecast update) is now two weeks away, and we see downside risk to CAD as we look to an extension of the anticipated closing of the output gap (currently expected mid-2018)."
USD/CAD levels
The analysts at Scotiabank are neutral-bullish on the short-term outlook: "Momentum signals are remarkably muted with near-neutral momentum indicators and a trendless (sub- 25) ADX at 15. The post-Fed path has seen a sequence of higher lows and higher highs, pushing above 1.34 toward the crucial 1.3420 level. We look to further gains toward 1.3450 and the early March high in the mid-1.35s. Support is expected in the 1.3320-1.3350 area."
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