USD/CAD is now 150 pips off the lows of 1.1030 seen just at this time yesterday, after a positive reading gave a . The pair already got very close to the 1.12 line.
What is behind the fall of the C$? Here are three reasons:
Update: after the Fed’s hawkish decision, USD/CAD surges to a new 4 year high.
In addition, here is a technical analysis for AUD/CAD.
But first, let’s see how it looks on the chart:
Note that the rise of USD/CAD came in a few waves, and was followed by dead cat bounces. Dollar/CAD is also trading in a triangle.
And here are the reasons:
- Rate cut?: The most important reason is the speech given by Stephen Poloz, the governor of the Bank of Canada. His words were very dovish: he was worried about the low level of inflation and did not rule out a rate cut. Up to now, a rate cut wasn’t on the cards and the weaker C$ was thought to bring inflation back up. He probably wants a weaker currency.
- Resignation of Jim Flaherty: Canada’s long serving finance minister, resigned from office. He is considered a fiscal hawk, responsible for less government spending and thus a stronger currency. Even if his successor, probably Joe Oliver, will follow his footsteps, it will be hard to enter Flaherty’s big shoes. The outgoing minister was a prominent G7 speaker as well.
- Weak Wholesale Sales: While this is usually a second tier figure, the rise of only 0.8% instead of 1.2% expected just adds to the pain, as markets are looking to sell the Canadian dollar.
The most important resistance line is the multi-year high of 1.1224. The pair is still within a distance from that line. 1.1150 serves as support. For more lines, events and analysis, see the Canadian $ forecast.