Canadian consumers want to have their inflationary cake and eat it, with a hot retail sales report bolstering bets that the BOC could hike again at their next meeting in July. Whilst a hike is not yet a given, the BOC did deliver a hawkish hike earlier this month - and with consumers continuing to spend, it keeps the pressure on the BOC for further hikes.
Yet a weaker USD - seemingly on the back of Jerome Powell's testimony not being hawkish enough - helped USD/CAD break to a 9-month low.
The daily chart shows that is closed near the lows of the day after falling through a major zone of support. It's interesting to see the daily low found support at the September VPOC (point of control), so perhaps we'll see a minor bounce before losses resume in the direction of the breakout.
The bias remains bearish beneath 1.3270, but we'd prefer to seek bearish setups o lower timeframes beneath Tuesday's low to increase the potential reward to risk ratio
But if bears maintain their grip on USD/CAD, a break to new lows brings the 1.3000 handle into focus over the coming weeks.
Yet a weaker USD - seemingly on the back of Jerome Powell's testimony not being hawkish enough - helped USD/CAD break to a 9-month low.
The daily chart shows that is closed near the lows of the day after falling through a major zone of support. It's interesting to see the daily low found support at the September VPOC (point of control), so perhaps we'll see a minor bounce before losses resume in the direction of the breakout.
The bias remains bearish beneath 1.3270, but we'd prefer to seek bearish setups o lower timeframes beneath Tuesday's low to increase the potential reward to risk ratio
But if bears maintain their grip on USD/CAD, a break to new lows brings the 1.3000 handle into focus over the coming weeks.
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The combination of a soft Canadian inflation report and hawkish comments from Powell has sent momentum the wrong way. It would likely take today's Q1 GDP report to be revised significantly lower and tomorrow's core PCE inflation to roll over for this to weigh meaningfully on USD/CAD. Happy to step aside on this one.
