USD/CAD rises to a high of 1.3144 on the day
It’s not just the aussie and the kiwi that is suffering the short end of the stick today, the loonie is also weighed lower as risk sentiment continues to stutter but also as oil prices fail to build off yesterday’s rebound.
Although off the lows for today, WTI is still down by 0.7% currently trading at $66.88 and the weaker sentiment across risk assets isn’t helping to keep the loonie afloat. Right now, the hawkish interpretation of Poloz and the Bank of Canada is all but forgotten as the drop seen in USD/CAD that day has all but been erased.
Fundamentally, there are reasons for the loonie to rally but yet it is struggling. And when something like that happens, it’s never a good sign. I want to pin this down to oil prices but it’s really been a case of setbacks for loonie buyers over the past few months.
We had the USMCA deal settled and that failed to provide any lift for the currency and even with the hawkish Bank of Canada statement this week it’s not enough to bolster support for the currency to move higher.
You can argue that oil is down by 13% off the highs seen at the start of the month and the fact that risk sentiment continues to sour as reasons for the upside move here, but I would say that can be negated somewhat by the macro themes backing the loonie. However, we are where we are now and the technical indicators are not suggestive of a move lower in the pair right now.
We can debate about the fundamentals until the break of dawn but if there is no case to be built on the technical picture, it means very little in the end.
For USD/CAD, the near-term bias is also more bullish and with price already sitting above the 100-day MA and threatening to firmly break above the resistance around 1.3132, price bias is turning more bullish for the time being. Further resistance is seen next at the August high of 1.3177.