Canadian Dollar Price Outlook Talking Points:
- It’s been a busy past week in USDCAD, as last Thursday saw the pair peek above its prior month-long range[1], but that was followed by an aggressive reversal that’s seen as many as 200 pips taken out of the USDCAD spot as USD-weakness has taken-over.
- The Canadian Dollar[2] weakened after last month’s BoC rate decision[3] and USD/CAD[4] tested up to a fresh six-month-high. But buyers were unable to hold the move and this week’s run of USD-weakness has driven USDCAD back down towards six-week-lows.
- This Friday brings jobs reports out of both the United States and Canada, keeping USDCAD in the spotlight for themes of near-term volatility.
USDCAD Tests Key Support After BoC-Fueled Bullish Breakout Pulls Back
It’s been a busy week in USDCAD. Last Wednesday brought the May rate decision from the Bank of Canada, and despite the fact that inflation rests very close to the bank’s 2% target, the overall tone came off in a generally dovish manner[5]. The bank removed a prior statement alluding to returning to the neutral rate, indicating that the BoC isn’t looking as closely at future rate hikes as they were previously. This helped USD/CAD to spike up to a fresh six-month-high, threatening to break a range that had built-in over the prior month of price action[6].
Prices in USDCAD rallied to as high as 1.3565, which was an initial target level looked at for bullish breakout potential in the USDCAD technical piece published last Tuesday[7],
