By Samir Al Khoury,
The USD/CAD price continues its downward trend for the fifth consecutive day, reaching 1.3635 today, but it is still up approximately 3% year-to-date.
Recent Canadian economic data indicate that the Canadian economy is resilient:
• The Ivey Purchasing Managers’ Index (PMI) rose to 63.0 points, surpassing expectations (58.1) and the previous reading (57.5). This marks its highest level since June 2022.
• The rate of change in employment increased, with 90.4K new jobs added, exceeding expectations (20.9K) and the previous reading (-2.2K).
• The unemployment rate stood at 6.1%, lower than expectations (6.2%) but consistent with the previous reading.
The consumer price index in Canada rose by 2.9% annually in March, suggesting the possibility of the Bank of Canada maintaining interest rates at their current level of 5.00% to control inflation, which remains above the target rate of 2%.
It’s worth noting that an important factor that could boost the US dollar against the Canadian dollar is the strength and flexibility of the US economy, along with the decrease in market expectations regarding the timing of a US interest rate cut, which supports the US dollar against major currencies.
Analysts are closely watching today’s release of the headline and core consumer price indices, as well as retail sales data in the United States. Caution is advised, as any readings higher than expectations for the consumer price indices and retail sales could have a positive impact on the US dollar and a negative impact on foreign currencies and other financial instruments.
Regarding technical analysis, if the USD/CAD breaks below the pivot point of 1.3659, it may target support levels at 1.3627, 1.3601, and 1.3569. Conversely, if it surpasses the pivot point, it is likely to target resistance levels at 1.3685, 1.3717, and 1.3743. The Relative Strength Index (RSI), currently at 45 points, suggests negative momentum for the USD/CAD pair.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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