Fears of a deepening recession in Canada continued to weigh on the exchange rate, and the USDCAD may continue to push higher over the near-term as investors expect the Bank of Canada to ease policy further in the months ahead to steer the world’s eighth largest economy out of its first recession in over a decade.
Currency Pair: USD/CAD
Chart: 60 Min Charts
Short-Term Bias: Bullish
Analysis
Fears of a deepening recession in Canada continued to weigh on the exchange rate, and the USDCAD may continue to push higher over the near-term as investors expect the Bank of Canada to ease policy further in the months ahead to steer the world’s eighth largest economy out of its first recession in over a decade. After slipping to a low of 1.1463 in November, the pair surged to a high of 1.3065 earlier this week, which is the highest level seen since September 2004, and the Canadian dollar is likely to weaken further over the near-term as the outlook for growth and inflation falter. Over the next few hours of trading, the pair is likely to push higher to fill-in the gap from the 120 SMA, and may work its way towards 1.2900 as the economic calendar for Canada is expected to show a 55.0K drop in employment. Nevertheless, as fundamental headwinds continue to reinforce expectations of a deepening downturn in the U.S. and Canada, the dour outlook for future growth could push the pair sideways, and the USDCAD is likely to hold within a tight range ahead of the FOMC policy meeting schedule for next week. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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