USD/CAD has declined further ahead of the Canadian GDP data. Analysts expect a reading of 0.5% MoM compared to January’s 0.7%. Earlier in the week, the country recorded strong growth in retail sales at 4.8% MoM. The number was higher than the expected 4.0% and January’s -1.1%. The rise in crude oil price has also strengthened the Canadian dollar. WTI futures have risen from $60.63 on Monday to the week’s high of $65.45 on Thursday.
Despite the strong economic data and steady recovery, Canada is still struggling with the rising cases of COVID-19. On Wednesday, the Pan American Health Organization note that the infection rate in Canada has surpassed that of the US for the first time since the beginning of the pandemic. In the US, about a third of the populace has been fully vaccinated. In comparison, about 3% of Canadians have received the jab.
USDCAD Technical Outlook
USD/CAD remains on a downtrend ahead of Canada’s GDP data, which is scheduled for Friday. At the time of writing, the pair was down by 0.07% at 1.2273. This is its lowest level since January 2018. Since the beginning of the week, it has fallen by about 1.75%.
The formation of a bearish pennant is an indication that USD/CAD is likely to fall further. However, with the rising COVID-19 cases in Canada, the pair may rise to 1.2287 before moving further down. On the lower side, the levels to watch out for are 1.2250 and 1.2172. The latter will be its lowest level since September 2017. However, a move above 1.2300 will invalidate this thesis.
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