Economy Forex News

USD/CAD remains capped below 1.2390

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  • The US dollar retreats after being rejected at 1.2390.
  • The pair remains flat ahead of key macroeconomic events later this week.
  • USD/CAD could extend losses towards 1.2200 – MUFG.

USD opened the week on a moderately positive tone and extended its rebound from Friday’s low at 1.2335 to hit resistance again in the 1.2385/90 area. USD/CAD has retreated to 1.2360 afterwards and remains virtually sideways on the day.

USD/CAD

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Sideways trading ahead of key macroeconomic data.

Major currency crosses are trading within previous ranges on Monday. With the US dollar slightly firmer against its main rivals in a sideways trading session. Investors remain cautious before the release of US GDP data and monetary policy decisions from the European Central Bank, Bank of Japan, and Bank of Canada.

A moderate pullback in US Treasury yields and lingering inflation concerns are keeping US dollar bulls at bay today. The yield on the 10-year bond is down to 1.63% on Monday from multi-month highs of 1.68% last week, weighing on the dollar’s demand.

In regard to the Canadian dollar. Growing expectations that the Bank of Canada will start raising rates sooner than expected are supporting the CAD. Which increased more than 3% in the past five weeks. Following this week’s meeting, some market voices anticipate that the BoC may start to raise the tone of its message, which could further boost the Canadian dollar.

USD/CAD: scope for a drop to 1.22 -MUFG

According to MUFG’s FX analysis team, the pair could reach 1.2200 in the near term as CAD is supported by fundamentals.

“Over the past month, the Canadian rate market has shifted sharply to price in two BoC rate hikes and a broader hiking cycle. QE purchases run at CAD2 B per week presently, and the BoC may announce plans to formally end QE this year. In order to maintain CAD’s upside momentum, the BoC should also drop its forward rate guidance”. “The next key support area is around the 1.2200 level.”

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Michelle D. Madsen

Michelle D. Madsen graduated from the University of Westminster and has been deeply involved in the world of finance ever since. She has worked as a Broadcast Journalist hosting various news shows and informative webcasts about the financial markets. Since 2004 she has also been writing for Metanews daily, her attention to detail, and her in-depth knowledge of the financial markets have led her to cover Foreign Exchange and commodities. The world of finance has changed in the last few years with the introduction and rising popularity of cryptocurrencies. She has in no means been left behind, adding this to her bank of intellect and is now also an expert in cryptocurrencies. For the last ten years, Ms. Madsen has been engaged in the financial market. She has notedly written a great number of incredibly informative reviews for the crypto exchange and forex brokers. Her wealth of knowledge has enabled her to become a leading expert in the field. She continues to inform the public writing up-to-date, thorough reviews for the readers of Metanews as she has for the last decade.
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