USD/CAD retreats after struggling at 1.2900, hovers around 1.2850s on a weak US dollar By christianborjon USDCAD Majors Macroeconomics Technical Analysis
decision, to be known on Wednesday, as USD bulls book profits and get to the sidelines to assess the direction, pace of QT, and how many 50-bps hikes would the Fed deliver in the year. At the time of writing, the USD/CAD is trading at 1.2854, recording decent losses of 0.17%., a gauge of the greenback’s value, slumps 0.25%, sitting at 103.346, also weighed by falling US Treasury yields. The 10-year benchmark note sits at 2.920%, retreated eight bps from the YTD high at 3%, reached on Monday.
On the macroeconomic front, the Canadian docket would feature the Bank of Canada Governor, Rogers. On the US front, US Factory Orders for March rose by 2.2% m/m, higher than the 1.1% estimates. At the same time, March’s US JOLTs Job Openings came at 11.549M, beating expectations of 11M, showing the tightness of the US labor market.
That said, USD/CAD traders would need to be aware that once the Fed hikes 0.50%, both countries will have interestat 1%, which could favor the USD in the long term. Why? Because, as Brown Brothers Herriman analysts noted, World Interest Rates Probabilities “suggests three more 50 bp hikes in June, July, and September that would take the Fed Funds rate up to 2.25-2.50%. After that, two 25 bp hikes are priced in for November and December that would take the Fed Funds rate up to 2.75-3.0%.
With that said, the USD/CAD first support would be 1.2800. A break below would expose April’s 27 daily low at 1.2777, followed by April’s 29 swing low at 1.2718.
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