USD/CAD battles back on the 1.37 handle, upside not done yet?
USD/CAD is trading at 1.3723, up 0.24% on the day, having posted a daily high at 1.3754 and low at 1.3669.
The Canadian dollar had been outperforming all of the G10 currencies at the start of this week, rallying against the dollar from just below the 1.38 handle and down to 1.3643 before today's reversal took place from just below the 200 smoothed sma on the 1-hour sticks.
- US crude production growth verified – Deutsche Bank
- WTI struggles to hold above $46 ahead of API stock report
"CAD appears to have entered a short-term period of consolidation following an impressive 4% decline from its mid-April high to Friday’s 14-month low. Yield spreads appear to have steadied, with the 2Y U.S.-Canada spread hovering just above 60bpts. The near-term domestic risk lies with the release of second-tier building permits figures for March," explained analysts at Scotiabank who remain CAD bears on the basis of relative central bank policy, given the outlook for a neutral BoC and a gradually tightening Fed. "We hold a Q2 USDCAD forecast of 1.40."
Meanwhile, today's data from Canada offered the value of building permits issued by Canadian municipalities that fell 5.8% in March having contracted 2.5% in February, a negative for the Candian dollar.
USD/CAD levels
1.3750, today's high comes as first resistance while a break above the1.38 level opens the 1.3860 and 2016, Feb 24th high. However, the analysts at Scotiabank explained that the bullish momentum signals have softened further and DMI’s have moderated. "USD/CAD retreated to its 9 day MA (1.3686) and the near-term balance of risk appears to be shifting to neutral. Near-term support is expected at 1.3650, with resistance observed above 1.3720."