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Currency
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Last
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High
|
Low
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Daily Change (pip)
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Daily Range (pip)
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USD/CAD
|
1.3287
|
1.3365
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1.3265
|
63
|
100
|
USD/CAD Daily
Chart – Created Using Trading View
USD/CAD pares the rebound from earlier this week, with the pair slipping to a fresh monthly low of 1.3264 as Canada Retail Sales exceeds market forecast and jumps 2.2% in January; a close below the Fibonacci overlap around 1.3290 (50% retracement) to 1.3310 (38.2% retracement) raises the risk for a further decline in the exchange rate especially as former-trendline support on the Relative Strength Index (RSI) appears to be offering resistance.
The pickup in household consumption accompanied by the ongoing expansion in the labor market may put pressure on the Bank of Canada (BoC) lift the benchmark interest rate off of the record-low, but the Consumer Price Index (CPI) may tame interest rate expectations as the headline reading for inflation is expected to hold steady an annualized 2.1% in February; in turn, Governor Stephen Polozmay continue to endorse a wait-and-see approach at the next meeting on April 12 as ‘subdued growth in wages and hours worked continue to reflect persistent economic slack in Canada.’
Moreover, the second-tier data prints coming out of the U.S. may fail to prop up on the dollar as the Federal Open Market Committee (FOM) is widely expected to retain the current policy at the next interest rate decision on May 3, but Fed Fund Futures may continue to highlight expectations for a move in June as Chair Janet Yellen and Co. continue to project three to four rate-hikes for 2017.
Indeed, the broader outlook for USD/CAD remains constructive as the pair continues to operate within the upward trending channel carried over from 2016, but a close below the Fibonacci overlap around 1.3290 (50% retracement) to 1.3310 (38.2% retracement) may open up the next downside target around 1.3210 (61.8% retracement) followed by the 1.3100 (78.6% retracement) handle.
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