The Bank of Canada is hawkish and this was reaffirmed in the Portugal Central Bank fest. Prices of oil had been stabilising after the flirt with $42. It is even more than stabilising: WTI now trades well over $45. Everything was set for a test of USD/CAD under 1.30.
Can it hold its ground at these levels?
Dollar/CAD reached a low of 1.2986, which is more than just a minor brush, but it is struggling with the round number. Moreover, the next line of support is quite close: 1.2970, which was the trough for February.
The Canadian dollar is not the only currency that is partying against the dollar: also the euro and the pound are making headway. Nevertheless, also they seem somewhat overstretched.
Further below, support awaits at 1.2820, followed by 1.2750. Resistance is only around 1.3160 and 1.3280.
More: USD/CAD: Looks Cheap Here; High-Frequency Model Targets A Push Back To 1.34 – TD
What’s next?
The Canadian dollar faces a significant test on Friday at 12:30 GMT: the release of monthly GDP. This will be the first look into Q2, with the publication for the month of April.
One of the reasons for the optimism from the Bank of Canada was the strength of the economy in the first quarter. Yet they also warned that Q2 might not repeat the success. We will learn something about it tomorrow.
Perhaps the most decisive test is the jobs report next Friday. And it will be jobs day for both Canada and the US.
Here is how it looks on the daily Dollar/CAD chart:
