- Loonie trims Friday’s gains across the board and US dollar rises amid risk aversion.
- USD/CAD reverses sharply, rising more than a hundred pips during the last 24 trading hours.
The USD/CAD gained momentum during the US session and climbed to 1.3370, hitting a fresh daily high. As of writing, trades at 1.3370, near the top and with a robust bullish tone. It is up by 50 pips from Friday’s close, trimming most of the losses on Friday. The Loonie jumped after Canadian employment data that surpassed expectations but the positive did not last long and today is losing ground.
Recently printed a fresh a daily high at 1.3374. From Friday’s low gained 120 pips, making a significant reversal. The move to the upside was supported by a weaker Loonie but also on the back of a rally of the greenback. The demand for the US dollar rose amid risk appetite. Equity prices in Wall Street are falling again with the Dow Jones at the lowest since July.
The rally of USD/CAD took place even despite Canadian data released today. Hosing start rose by 216K in October above the 196K expected, while building permits dropped 0.2%, in line with expectations. “Looking beyond near-term swings in the data, we continue to think interest rates will continue to rise gradually going forward “” and that will weigh particularly heavily on interest-rate sensitive purchases like houses. Higher rates plus regulatory measures have already slowed the home resale market significantly. We expect those trends will ultimately result in slower home building activity next year as well“, said Nathan Janzen, Senior Economist, at RBC Capital Markets.
USD/CAD Levels to watch
To the upside, resistance levels are seen at 1.3380, followed by 1.3400 (Dec 7 high) and 1.3430. On the flip side, support could be located at 1.3335 (Asian session high), 1.3290 (Dec 10 low) and 1.3255.
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