USDCAD trades 0.27% higher at 1.3366, amid the crude oil sell-off and the risk-off mood (reflected by weaker equities) have taken a toll on the Loonie. Crude oil, Canada’s main export product is 4.59% lower at $46.45 per barrel making fresh 13-month lows.
Odds of an interest rate cut rising for next week’s Bank of Canada policy meeting. Bank of Canada was on hold during 2019, while Fed cut rates three times. For now the interest rates differential is CAD positive but things might change if the central bank enters an easing cycle. Investors have also increased bets for an interest rate cut by the Fed in the next meeting.
On the economic data, the U.S. Gross Domestic Product (Annualized) came in at 2.1% in line with expectations for the fourth quarter. The Durable Goods Orders came in at -0.2% topping the expectations of -1.5% in January. The Initial Jobless Claims came in at 219K, above the expectations of 212K in February 21.
The USDCAD managed to break higher at five-month highs as the strong rally that started early 2020 accelerates after the pair broke above the 200-day moving average. The technical outlook is clearly bullish and higherrr levels might be on the cards.
On the upside, initial resistance stands at 1.3374 the daily top. In case of a break above, the next hurdle is at 1.3431 the high from June 18th. Next level to watch on the upside is at 1.3448 the high from June 4th 2019.
On the flip side the first support for the pair stands at 1.3316 the daily low. If the pair breaks below, the next support level will be met at 1.3269 the low from yesterday’s trading session. In case of further pullback then the next target will be met at 1.3242 the February 24th lows.