USD/CAD Breaks Out on Commodity Route

Posted On 04 Aug 2015

The USD/CAD consolidated no Tuesday following a breakout on Monday to a fresh 10-year high. Declining commodity prices have pushed the Bank of Canada into a corner where they are likely to feel pressure to add growth insurance with another ease of rates.

Looking ahead, Canadian employment and trade data will highlight as the markets reopen after Monday’s civic holiday. The U.S. employment figure scheduled for Friday could be a further catalyst if wage growth appears. The recent release of manufacturing data in the U.S. was mixed with the ISM dipping slightly while the Markit PMI edged higher.

The technicals reflect a breakout with the USD/CAD poised to make a run at the 2004 highs at 1.4020. Support on the currency pair is seen near the gapp on Monday at 1.3090 and then the 10-day moving average at 1.3040.

Momentum has turned higher with the MACD (moving average convergence divergence) index generating a buy signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crossing above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.

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Source:: USD/CAD Breaks Out on Commodity Route

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