- The Canadian dollar rose to almost a seven-week high.
- Oil saw a 6.3% increase in price to $84.93 per barrel.
- The US industrial sector experienced a decline last month.
Today’s USD/CAD outlook is bearish. On Monday, the Canadian dollar rose to almost a seven-week high against the US dollar as oil prices increased. A Bank of Canada poll revealed that fewer businesses anticipate a recession.
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One of Canada’s main exports, oil, saw a 6.3% increase in price to $84.93 per barrel. This came as the Organization of the Petroleum Exporting Countries and Allies, or OPEC+, startled the market with its intentions to reduce output further.
The Bank of Canada no longer seems to be an “outlier” after pausing its interest rate increase campaign in March.
Since last month, when signs of stress in the global financial sector first surfaced, investors have been reducing their bets on further tightening from other central banks, including the Federal Reserve.
According to a poll conducted by the Bank of Canada in the first quarter, about half of Canadian businesses expect a mild recession over the coming year, less than in the fourth quarter. Most businesses expect inflation to remain above 2% until at least 2025.
Separate data indicated that March saw a decline in manufacturing activity in Canada.
The US industrial sector experienced a decline last month, which added to the growing evidence of a slowing economy, and this caused the dollar to edge lower.
In March, manufacturing activity declined to its lowest level in almost three years as new orders continued to decline. This is the first time since 2009 that all manufacturing PMI subcomponents have fallen below the 50-point threshold.
USD/CAD key events today
Investors will receive a measure of job vacancies in the US. This report will show whether the labor market is softening in the face of higher interest rates.
USD/CAD technical outlook: Downtrend pauses in the oversold region
The 4-hour chart shows USD/CAD in a solid downtrend, with the price making lower lows and highs. The price also stays far below the 30-SMA, showing a steep bearish move. Bearish momentum is at an extreme level as the RSI trades in the oversold region.
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The price has broken below the 1.3500 key level and is currently heading for the 1.3400 key level. Since the RSI is oversold, the bulls might return for a pullback before the downtrend continues.
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Saqib Iqbal
