Canada’s trade deficit widened more than expected in June to C$3.73 billion, denting sentiment on the loonie, while rising core inflation compared to dropping headline is somewhat ambiguous. CAD’s traditional correlation with crude oil hasn’t been much in focus in the last few weeks as oil has moved up fairly strongly. Yields from the USA’s decade bonds have been consistently at least 0.4% higher than Canada’s equivalents so far this quarter, suggesting more inflow to the greenback than the loonie.
The 23.6% monthly Fibonacci retracement around $1.345 remains the key resistance which has yet to be broken. If there is a breakout from here, the short-term uptrend might gain pace and the greenback retest $1.365 in the next few weeks. However, that depends on Canadian inflation this week and on how markets perceive the Fed’s minutes. Stronger data from Canada and clearer hints of an extended pause by the Fed might drive a return to the range.
The 23.6% monthly Fibonacci retracement around $1.345 remains the key resistance which has yet to be broken. If there is a breakout from here, the short-term uptrend might gain pace and the greenback retest $1.365 in the next few weeks. However, that depends on Canadian inflation this week and on how markets perceive the Fed’s minutes. Stronger data from Canada and clearer hints of an extended pause by the Fed might drive a return to the range.