The Canadian dollar gave back much of its gains on Friday after a significant shift in labor market dynamics. Even with the earlier 75bps interest rate hike by the Bank of Canada (BoC), the narrative quickly shifted back in favor of the U.S. dollar which remains supported by an aggressive Federal Reserve, robust economy and safe-haven demand as recessionary concerns grow.
From a CAD perspective, crude oil may be in for substantial downside pressure as demand destruction gains favor leaving it exposed to further downside.
Next week, the economic calendar (see below) is dominated by U.S. fundamentals with inflation under the spotlight. A continuation of the recent ease in inflation to 8.5% may limit dollar gains while an increase could supplement the Fed’s already hawkish stance.
Price action on the daily USD/CAD chart shows bulls being constrained by the key area of confluence at channel resistance (black). Friday’s daily candle displays a long lower wick pushing off the 50-day EMA (blue)which can point to impending upside. The Relative Strength Index (RSI) currently sitting around the midpoint 50 area which favors neither bullish nor bearish momentum which reflects the upcoming U.S. fundamental data. I expect markets to have a clearer picture after the economic releases have been analyzed as to the state of the U.S. economy.
I wouldnt be suprized if we end up with a bank move north for a liquidity flush back down here, or this could be the shake out?
From a CAD perspective, crude oil may be in for substantial downside pressure as demand destruction gains favor leaving it exposed to further downside.
Next week, the economic calendar (see below) is dominated by U.S. fundamentals with inflation under the spotlight. A continuation of the recent ease in inflation to 8.5% may limit dollar gains while an increase could supplement the Fed’s already hawkish stance.
Price action on the daily USD/CAD chart shows bulls being constrained by the key area of confluence at channel resistance (black). Friday’s daily candle displays a long lower wick pushing off the 50-day EMA (blue)which can point to impending upside. The Relative Strength Index (RSI) currently sitting around the midpoint 50 area which favors neither bullish nor bearish momentum which reflects the upcoming U.S. fundamental data. I expect markets to have a clearer picture after the economic releases have been analyzed as to the state of the U.S. economy.
I wouldnt be suprized if we end up with a bank move north for a liquidity flush back down here, or this could be the shake out?