The Canadian dollar is in positive territory and continues to have an excellent week, with gains of 1.28%. The currency is back below 1.25 and is looking to close below this symbolic line for the first time since mid-November.
This week’s robust rally by the Canadian dollar is more a case of greenback weakness rather than loonie strength, as the US dollar has retreated broadly against the major currencies this week. Investors continue to be in a risk-on mode, shrugging off a soft nonfarm payrolls report and a sizzling CPI reading of 7.0% y/y. Fed Chair Jerome Powell managed to soothe concerns of runaway inflation earlier this week, saying that the Fed stood ready to raise rates to combat inflation but that he expected inflation to ease in later in the year. This has kept risk appetite high, but it’s questionable if investors will stay this optimistic if inflationary pressures remain at 40-year levels.
We continue to see a rotation out of US dollars this week, with the majors enjoying gains of around 1% against the retreating US dollar. The driver behind the US dollar’s weakness has been elevated risk appetite, which has not waned despite exploding Omicron cases, a soft nonfarm payrolls report and surging inflation in the US. Still, risk sentiment can change quickly, and I would not be surprised to see the US dollar recover in the near term if Omicron is more damaging than anticipated or if inflation heads even higher.
The week wraps up with US retail sales later today. The headline reading is expected to come in at -0.1%, and a decline could boost the Canadian dollar as it would put pressure on the Fed to hold back from normalizing policy. Investors will also be keeping an eye on UoM Consumer Sentiment, which is expected to drop from 70.6 to 70.0 points. A sharp drop in consumer confidence could raise expectations that the Fed will delay a rate hike, which would be bearish for the US dollar.
USD/CAD Technical
- USD/CAD is testing support at 1.2513. Below, there is support at 1.2396
- There is resistance at 1.2762 and 1.2879
면책 조항: 본 게시글에 표현된 견해는 전적으로 작성자의 견해이며 Followme의 공식 입장을 대변하지 않습니다. Followme는 제공된 정보의 정확성, 완전성 또는 신뢰성에 대해 책임을 지지 않으며, 서면으로 명시적으로 언급되지 않는 한 해당 내용을 기반으로 취해진 어떠한 조치에 대해서도 책임을 지지 않습니다.
