USD/CAD holds onto weekly gains, keeps looking at 1.2800
- US dollar remains firm across the board, holds onto weekly gains.
- USD/CAD heads for the highest daily close in a month.
The USD/CAD rose earlier on Friday to 1.2796, the highest intraday level since January 6. It then pulled back to the 20-hour SMA at 1.2745, and it is moving again toward the recent top. The key driver continues to the dollar’s rally.
The greenback remains supported by risk aversion and Fed’s tightening expectations. Higher crude oil prices supported the loonie only modestly.
From the level it had a week ago, USD/CAD is up more than 200 pips, having the best performance since August of last year.
After central banks, Jobs data
Despite falling against the US dollar, the loonie is about to post the highest weekly close in more than a year versus AUD and NZD on a risk aversion environment. The Bank of Canada did not hike rates this week, but offered signs that a tightening cycle will begin in March.
The focus across financial markets will likely continue around Wall Street and the US dollar. Regarding data, the key report in the US will be the Non-farm payroll report. After Wednesday’s FOMC meeting, prices are still adapting to the changes in monetary policy expectations.
“Next week, the focus will be on January jobs data in Canada, a chance to measure the impact of Omicron restrictions in the country. Signs of resilience and more wage growth pressure could fuel speculation around a 50bp March hike and support CAD. We expect USD/CAD to stabilise around current levels with more USD strength that should mostly be channelled through weaker low-yielders”, explained analysts at ING.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
