Dollar/CAD keeps climbing, as the pair gained ground for a fifth consecutive week. Will the U.S. dollar rally continue? With Christmas on the schedule next week, there are no Canadian events, so U.S indicators will have a magnified impact on the movement of the pair.
Another week, another drop for the wobbly Canadian dollar, which fell 1.6% percent last week. The currency is viewed as a risk asset, so turmoil in the equity markets has soured risk appetite and investors have flocked to safe-haven assets at the expense of minor currencies like the Canadian dollar. Global trade tensions remain high, as U.S-China trade talks are yet to begin. It’s difficult to see how the sides will make enough progress before March 1, when the U.S has said that it will impose further tariffs on China. This could mean more headwinds for the Canadian dollar in the New Year.
Another factor weighing on the Canadian currency is the decline in oil prices. WTI Crude has fallen to $45 a barrel, as a recent OPEC cut in production failed to curb the downward spiral. With oil prices down by some 35% in the past three months, the Canadian export sector is hurting.
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
*All times are GMT
USD/CAD Technical Analysis
Dollar/CAD didn’t miss a beat, posting gains every day last week. The pair continues to break through resistance lines and punched past 1.3560 late in the week (mentioned last week).
Technical lines from top to bottom:
We begin with resistance at the round number of 1.39, which has held since February 2016. 1.3757 is next.
1.3645 provided support when the pair traded higher in early 2017. 1.3560 capped $/CAD in May 2017. 1.3445 was the peak in early December.
1.3385 was the high point seen in May and towers above. 1.3350 was a stepping stone on the way and on the way down around the same time.
1.3320 was the high point in late November. Lower, 1.3265 was the high point in mid-November. 1.3225 played a role in capping USD/CAD back in September.
1.3175 was a swing low in late November.
1.3125 was also a low point, earlier in the month. It is the final support level for now.
I remain bullish on USD/CAD
Global trade tensions remain high and the Fed just raised rates, so the Canadian dollar is unlikely to end this nasty slide before the New Year.
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