USD / CAD declines and returns below 1.2700

  • USD / CAD is testing weekly lows around the 1.2700 level again as the USD weakens.
  • Amid the lack of incoming notable Canadian economic events, the loonie is poised to follow the dollar’s lead.

He USD / CAD has returned to trading just north of the 1.2700 level, having retreated from Wednesday’s highs above 1.2790 immediately after the Fed’s rate decision. The loonie is benefiting from a weaker USD and the USD / CAD is currently down around 40 pips or 0.3% on the day.

The Loonie follows the example of the dynamics of the US dollar

There hasn’t been much to talk about regarding Canadian fundamentals so far in this session, aside from the stale ADP non-farm employment shift in November that showed the economy added 40,800 jobs over the course of the month (the official report from the November labor market released on December 4 showed the country adds 62,000 jobs). Thus, the loonie is trading largely based on the U.S. dollar / risk appetite dynamics, now that a more subdued sounding BoC price has already occurred (this was why the CAD underperformed on Wednesday).

Indeed, the dynamics of the US dollar and risk appetite is certainly proving to be favorable for the Canadian dollar on Thursday, to the extent that the weakness of the US dollar has driven the CAD back to the 1.2700 level, an impressive turnaround. after the pair hit highs at 1.2790 for the third time this week in the immediate aftermath of the Fed’s monetary policy announcement on Wednesday.

USD / CAD remains within the weekly range for now

For now, the USD / CAD has been unable to break south of the 1.2690-1.2790 range that has prevailed for much of the week thus far. The top of this range has now been tested 3 times and the bottom of the range twice. However, if the USD continues to weaken, further lows and a breakout to the south are likely.

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