USDCAD – On the way to 1.2600?

USDCAD – On the way to 1.2600?

Chart Of The Day

One of the strongest currencies over the past few days has been the loonie. It’s up more than 230 pips against the buck since the start of the week after having failed to take out the upside at 1.3000 level. Higher oil prices. strong funda data and creeping doubt that the Fed will not hike rates more than 2 more times this year have all helped the currency to rally over the past 48 hours.

If the labor data tomorrow surprises to the upside, the markets will begin to price the prospect of BOC rate hikes before the end of summer. Right now the BOC is the only G-7 central bank to seriously consider additional tightening and with the Canadian economy doing better than expected chances are good that BOC may resume its normalization policy soon.

With 1.3000 firmly rejected, the path of least resistance in the loonie is towards 1.2600 and a strong labor number tomorrow could send the pair in that direction before the week is over.

USDCAD – Back to 1.2600?

USDCAD – Back to 1.2600?

Chart Of The Day

Of all the comm dollars, none has held up as well against the buck as the loonie. While all others have tumbled against the greenback, the Canadian dollar held firm rejecting 1.2500 level on multiple occasions.

A big reason for loonie’s relative strength is the fact that the BOC is the only other G-7 central bank considering a rate hike. Tomorrow’s Canadian CPI and Retail Sales data should go a long way towards determining if another rate hike out of Canada is a real possibility before the year-end.

The market is looking for stronger data out of both CPI and Retail Sales data and if the numbers beat expectations USDCAD could test the 1.2400 level. However, if the data misses the pair could quickly push towards 1.2600 which has served as resistance for the past two weeks.

USDCAD – 1.2600 in View?

USDCAD – 1.2600 in View?

Chart Of The Day

The rise in oil back towards the $50/bbl level has put fresh life into USDCAD pair it inches its way towards the 1.2700 figure. But unless crude breaks above $50 and continues higher we doubt there is much further rally left in the pair.

The fundamentals of Canadian economy have continued to deteriorate as a result of the slump in oil prices and tomorrow’s CPI data and Retail Sales release are likely to confirm the downward trend. That should leave the BOC in its accommodative mode and keep a lid on any loonie strength. For now the 1.2600 level is firm support while 1.3000 is now new resistance for the pair.