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Economists at DBS Bank note that CAD weakness above 1.21 per USD gains traction. USD/CAD is set to challenge the 1.22 level above which lies the 1.2250 50-day moving average.

Falling lumber prices weigh on the loonie

“The Bank of Canada, at its meeting last Thursday, did not exhibit any urgency to follow through on April’s decision to taper bond purchases. CAD is also weighed by lumber prices which have sunk more than 40% over the past month to below USD1,000 per thousand board feet for the first time since 30 March.”  

“Having traded above its 20-day moving average around 1.2090, USD/CAD could next test its 1.22 high seen a month ago towards its next major resistance around 1.2250 or its 50-day moving average.”