USD CAD hits new 2 month high on surging US dollar
As the US dollar remained elevated on Tuesday in the aftermath of Federal Reserve Chair Jerome Powell’s hawkish statements in front the US House Financial Services Committee, USD/CAD broke out to a new 2-month high, tentatively confirming a continuation of the uptrend that has been in place since early February.
Share this:
As the US dollar remained elevated on Tuesday in the aftermath of Federal Reserve Chair Jerome Powell’s hawkish statements in front the US House Financial Services Committee, USD/CAD broke out to a new 2-month high, tentatively confirming a continuation of the uptrend that has been in place since early February.
Late last week, the currency pair fell when the Canadian dollar surged after Canadian Consumer Price Index inflation data for January showed that prices rose substantially more than expected at +0.7% against prior expectations of +0.4% and a previous month’s reading of -0.4%. The unexpectedly high inflation reading boosted the Canadian dollar as markets speculated on the higher potential for more policy tightening and rate hikes by the Bank of Canada.
Since that data was released last week, however, market focus has shifted squarely towards the US Federal Reserve’s outlook for rate hikes as indicated by Powell’s testimony that began on Tuesday. As it turned out, Powell’s testimony was more hawkish than might have been expected, as the Fed Chair hinted at potentially more rate hikes than previously projected due to significant strides in the economy, strength in the labor market, higher wage growth, rising inflation expectations, and changes in fiscal policy.
For USD/CAD, although higher inflation did indeed drive some speculation of a potentially more hawkish Bank of Canada, the Fed’s rather clear hawkish shift has underlined the continuing differences in policy stances between the US and Canadian central banks.
With continued speculation on a more hawkish Fed, USD/CAD is potentially poised to extend the short-term bullish trend that has been in place since early February. Any such continuation should target the next major resistance level to the upside around 1.2900, which represents the highs of late 2017.
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
NZD/USD pressure mounts as payrolls looms large
NZD/USD has fallen sharply as Fed rate expectations reset higher, but extreme downside stretch and major support raise the risk of a violent counter-trend rebound.
US Core PCE Preview: Stale or Significant for the Fed
Core PCE inflation takes center stage Wednesday, with traders watching for signs of renewed price pressure and clues on whether the Fed could hike again in October.
Gold Forecast: Are Bears Regaining Control of XAU/USD?
The start of the trading week has not been particularly favorable for gold. This can be seen in recent XAU/USD price action, with the metal falling nearly 4.00% over the last two trading sessions and bringing renewed attention to a bearish bias within the market.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.