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USD/CAD Will 1.3200 – Stop the Rally?
It’s be a remarkable rally for USDCAD as the pair is up almost 700 points in the month of May despite the fact that Crude is closing in $50/bbl level. The run in the pair is partly due short covering and partly to a more bullish outlook on the US dollar as the FOMC meeting minutes yesterday suggested that a hike may be coming in June. Such a move would widen the rate differentials between the two currencies and could push the pair towards the 1.3500 level.
But before that can happen -- USDCAD needs to overcome serious resistance as the 1.3200 mark. Tomorrow’s Retail Sales could do the trick if they miss forecasts. Markets are already anticipating a decline of -0.6% from 0.4% the month prior but a bigger miss of more than 1% could push the pair well through the 1.3200 figure and open the way to a run towards 1.3500.