- USD/CAD has gradually slid back from session highs at 1.2500 to under 1.2450 in recent trade.
- The pair continues to trade within this week’s ranges, however, with key events looming later in the week.
It’s been a subdued session thus far for USD/CAD. The loonie has largely shrugged off the typically mildly negative impact of lower crude oil prices, with the pair gradually edging lower and recently crossing beneath 1.2450, having rejected the 1.2500 level early on during Tuesday’s European session. Monday’s multi-year lows at just under 1.2440 remain the target for the bears and, beyond that, a longer-term move back towards 2018 lows in around the 1.2250 mark. At present, the pair trades flat on the day.
Driving the day
There hasn’t been any news, economic or pandemic related, out of Canada on Tuesday, so focus has been on the US dollar rise of the equation. Focus in the US has been on data; US Retail Sales dropped more than expected in February, but that mostly represents the fading boost of January’s stimulus cheques. Retail sales will undoubtedly jump again in March after the government hands out another $1400 to each US citizen. More concerning was the larger than expected drop in Industrial Production in February; analysts note that poor weather conditions last month contributed to the drop, but note also that global supply shortages also played a factor and this could be a longer-lasting drag.
While the Dollar Index has been choppy on Tuesday, this is mainly as a result of volatility in the euro, and other USD pairs (like USD/CAD, AUD/USD and NZD/USD) have seen much more consolidative trade that has largely stuck to recent ranges. This is not really surprising, given the looming FOMC rate decision on Wednesday. For a full preview, see below.
Meanwhile, there are also some key events north of the border worth noting. Wednesday’s Canadian Consumer Price Inflation data release for the month of February will be closely scrutinised, as will New House Price Index numbers for February (released on Thursday) and Retail Sales numbers for January (released on Friday).
Share
