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  • Canadians are facing higher mortgage rates on cheaper homes.
  • Year-on-year rents in Canada went up 18.5%.
  • The rental market’s demand has increased as Canadians are forced to rent.

Today’s USD/CAD price analysis is bullish as higher interest rates affect Canada’s economy.

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Canadians are facing higher rent prices which are hurting their buying power.

Home prices are rapidly dropping after rising during the pandemic, but Canadians are not feeling any relief as they are now facing sky-rocketing rent prices. Year-on-year rents in the country went up 18.5% in Toronto and 19.5% in Vancouver.

“The shift from frantic demand for homes-to-buy to homes-to-rent makes plain a broader issue with Canadian housing: that there simply is not enough of it,” said Dan Scarrow, president of Macdonald Realty in Vancouver.

“Higher (interest) rates are not destroying demand for housing, and it’s just shifting the demand from buying to renting,” he said. “The demand sloshes between renters and buyers, depending on where rates are so long as you have constrained supply.”

The BOC has raised rates from 0.25% at the beginning of the year to 2.5% to tame rising inflation. This fast rise in borrowing costs has dampened the real estate market. However, buyers cannot afford these cheaper houses as qualifying rates for mortgages have gone up.

“Rents have gone insane because people have to have a place to live,” said Paul Eviston, a Vancouver-based real estate agent. “Demand on the rental market has taken off as many people that were would-be buyers are now forced to rent.”

USD/CAD key events today

USD/CAD investors will not be receiving any significant news releases from Canada. Investors will be able to get a picture of the US government debt situation when the US 2-year Note Auction is released.

USD/CAD technical price analysis: Bulls facing resistance at 1.29362 

Usd/cad price analysis

Looking at the 4-hour chart, we see a break above the 30-SMA, showing control has shifted from bears to bulls. The RSI has also crossed above the 50 level favoring bullish momentum. This move up has, however, paused at 1.29362, where the price is experiencing resistance. 

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At this point, the price might retest the SMA before breaking above this level. However, if the level holds, we might see a return of bearish momentum as the price would break below the 30-SMA.

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