Established in 1974
185,800 clients worldwide
Over 15,000 markets

Day four: potential USD/CAD trade

USD/CAD hit a high of 1.0794 after the Bank of Canada gave a fairly cautious stance on inflation.

USD/CAD
Source: Bloomberg

As expected, the bank detailed that the recent spike in prices was mainly attributable to the temporary effects of higher energy prices.

There were very little clues in the narrative that the bank will change tact and portray a more neutral stance on its interest setting.

Technically there are some concerning signs with stochastic momentum starting to turn lower, however it hasn’t given a significant bearish signal as yet. The overnight high was also the exact 50% retracement of the recent rally.

I continue to hold a bullish bias on USD/CAD, with traders looking out for building permits, housing starts and weekly jobless claims as a potential driver in upcoming trade.

Spot FX USD/CAD chart
Click to enlarge

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.