Last week, the Canadian dollar continued to rally, pushed by a slew of supporting domestic data along with more evidence that the vaccination roll-out in Canada is keeping a high pace. This week will be very quiet data-wise and there are no central bank speakers scheduled. Economists at ING expect the USD/CAD pair to test the 1.20 psychological level.
Loonie is flirting with 1.20
“Inflation rose to 3.4% in April, which is a quite high figure considering the restrictions in place in many parts of the country. Retail sales for March soared past expectations and came in at 3.6% MoM. The data flow has clearly gone in the direction of mitigating the grim jobs numbers for April, and this is ultimately supporting hawkish expectations on the Bank of Canada.”
“External factors should therefore drive the large majority of CAD moves, and leave the loonie more vulnerable to potential unwelcome swings in commodity prices.”
“USD/CAD is very close to the key 1.2000 support, which may well be heavily tested in a risk-on environment next week.”
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