USD/CAD PRICE, CHARTS and ANALYSIS:

MOST READ: USDCAD Affords a Extra Direct Distinction on Charges Publish-Fed

USD/CAD FUNDAMENTAL OUTLOOK

USD/CAD has continued its upside transfer at this time amid a powerful comply with by means of from the greenback index. The European session noticed positive aspects capped as WTI oil staged a modest rebound affording the loonie a little bit of energy. The early components of the US session have seen WTI retreat as soon as extra permitting USDCAD to push on buying and selling across the 1.3460 deal with (on the time of writing).

The Ivey PMI information out of Canada at this time smashed estimates however did little to arrest the slide within the Canadian greenback. The PMI print was the best since August 2022 and can present the Financial institution of Canada with some meals for thought, notably if it results in a rise in demand and spending from shoppers which may have a knock-on impact on the inflation entrance.

For all market-moving financial releases and occasions, see the DailyFX Calendar

The Financial institution of Canada’s (BoC) pause on the speed hike entrance did include a warning that it may step again in ought to inflation not proceed its downward trajectory. Right this moment’s PMI studying might be the primary signal of the challenges which will lie forward for the central financial institution. The Financial institution of Canada Market Contributors Survey for This autumn 2022 was launched at this time with the median expectation for rates of interest in December 2023 resting at 4%, down from the present fee of 4.5%.

Financial institution Of Canada Market Contributors Survey This autumn 2022

Supply: Financial institution of Canada

The longer-term image for USDCAD favors additional upside at current with the 2 central banks now on completely different paths. Following Friday’s blockbuster information out of the US markets see little probability of the Fed reducing charges in 2023, with a minimal of two extra fee hikes anticipated. Ought to the US central financial institution comply with by means of, and US information stay strong shifting ahead we may very effectively see additional upside over the medium time period.

The Canadian greenback does look extraordinarily susceptible to additional losses, nonetheless a rebound in WTI costs may provide the loonie some respite. In the intervening time WTI is dealing with its personal headwinds because it waits for a requirement surge out of China which is but to materialize. This might be fascinating to observe because the week and month progresses.

TECHNICAL OUTLOOK

From a technical perspective, USD/CAD broke out of the falling wedge sample on Friday placing it on track for a possible 300-pip rally. The pair is more likely to submit its third successive day of positive aspects for the primary time since early December.

Resistance at the moment rests across the 1.3500 mark, which was the January 19 swing excessive whereas we even have the 50 and 100-day MA resting across the identical degree. Given the confluences in play we might be in for a retracement earlier than persevering with with the following leg to the upside focusing on the 1.3650 space.

USD/CAD Each day Chart, February 6, 2023

Supply: TradingView, Ready by Zain Vawda

IG CLIENT SENTIMENT DATA: BULLISH

IGCS exhibits retail merchants are at the moment SHORT on USD/CAD, with 61% of merchants at the moment holding SHORT positions. At DailyFX we sometimes take a contrarian view to crowd sentiment, and the truth that merchants are SHORT means that USD/CAD could proceed to rise.

— Written by Zain Vawda for DailyFX.com

Contact and comply with Zain on Twitter: @zvawda