Sunday, June 16, 2024

USD/CAD rallies to fresh YTD highs at around 1.3070s on broad USD strength

Must Read

The Loonie sustains substantial weekly losses of 2.04%.
An upbeat market mood and broad US dollar strength lift the USD/CAD.
USD/CAD Price Forecast: A close above 1.3078 would pave the way towards October 2020 highs at around 1.3389.

The USD/CAD soars above the 1.3000 mark for the first time since May 12 and records a fresh YTD high at around 1.3078 after Wednesday’s US Federal Reserve 75 bps rate hike, which did not catch traders off guard due to an article on the WSJ on Monday that foresaw an increase of that size. The USD/CAD initially reacted downwards to 1.2880 but was seen as an opportunity for USD/CAD buyers, which lifted the pair higher. At the time of writing, the USD/CAD is trading at 1.3045, up by 0.81%.

Overall US dollar strength, a tailwind for the USD/CAD

The market mood remains upbeat as global equities trimmed some weekly losses. In the FX space mood is mixed, with high-beta currencies down, except for the NZD and the GBP. In the case of safe-haven peers, the JPY is getting battered after the BoJ committed to its ultra-loose dovish stance.

In the meantime, the US Dollar resumed its uptrend and is gaining 1.04%, trading at 104.877. US Treasury yields are taking a breather, particularly the US 10-year benchmark note, down eight basis points, yielding 3.224%.

Data-wise, the Canadian docket reported the May Producer Price Index (PPI), which rose 15%, lower than the 16.4% reading but remains higher. Raw Material Prices increased by 37.4% YoY, though lower than 38.3% in April.

Later, the US docket featured May Industrial Production, which rose by 5.8% YoY, lower than April’s reading, adding to signs of an economic slowdown.

Sources cited by the WSJ said, “The pace at which everything is changing is quite alarming.” Sources added that the economy still stands on fairly solid ground to withstand inflation, supply-chain issues, and rising interest rates.

Meanwhile, Minneapolis Fed Neil Kashkari said that he supported 75 bps in June and could support another in July. He added that a prudent strategy might be to continue with 50 bps increases. St. Louis Fed President James Bullard said a soft landing is feasible if the post-pandemic shift is done well.

USD/CAD Price Forecast: Technical outlook

With the USD/CAD trading at fresh YTD highs, switching to the weekly chart is needed to determine what’s next for the major. It’s worth noting that the USD/CAD is trading above the 200-week simple moving average (SMA), a strong bullish signal that could lift the pair towards October’s 2020 highs at around 1.3390. Nevertheless, the USD/CAD is retreating below the May 12 high at 1.3076.

A daily close below 1.3078 would open the door for further losses. That said, the USD/CAD first support would be the 1.3000 mark. Once cleared, the following support would be the June 16 1.2860 cycle low, followed by 1.2800.

Key Technical Levels

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Read More

- Advertisement -spot_img
- Advertisement - Antennas Direct - Antennas Reinvented
- Advertisement -
Latest News

Media Hyping Trump’s Age as He Turns 78: ‘Giving Off the Old, Drunken Uncle Vibe’

Former President Donald Trump turned 78 on Friday, and the establishment media are already hyping his age, claiming he...
- Advertisement - Yarden: ENJOY $20 OFF of $150 or more with code 20YD150

More Articles Like This

- Advertisement -spot_img