USD/CAD consolidating close to 1.2870 ahead of Poloz
- Bank of Canda Gov. Poloz's speech slated at 20:15 GMT this Wednesday.
- USD/CAD remains bullish as USD pushes higher led by Treasury yields soaring.
The USD/CAD is trading at around 1.2886 up 0.25% on Wednesday in mid-US session.
The USD keeps pushing higher against the Canadian dollar following the same pattern than most major currencies as the 10-year US Treasury yield reached levels not seen since January 2014.
Investors will shift their attention to the BoC Governor Poloz speech coming up soon. Governor Poloz and Deputy Governor Wilkins will testify before the Senate Standing Committee on Banking, Trade, and Commerce. In the current environment, dovish comments may send the CAD lower against the strong USD. The event is scheduled for 20:15 GMT this Wednesday.
Further collaborating to the USD/CAD up move is the weakness of the Canadian dollar. Last week Stephen Poloz made some dovish comments which surprised investors who quickly sold CAD. Poloz used a more cautious tone taking a step back from its hawkish stance as the Canadian economy is showing signs of slowing down.
CAD is usually strongly correlated to the prices of oil and WTI crude oil is trading in a range between $67 and $69 a barrel for the 6th-day in-a-row not really affecting the loonie. The USD/CAD move higher is more a result of strong USD demand.
“In particular, we expect from Poloz to make a reference to higher potential output, transitory inflation tailwinds, the economy's sensitivity to higher rates, and pockets of labor market slack,” say analysts at TDS.
USD/CAD technical outlook:
“USDCAD is trading at 1.2853; the instrument is moving above Ichimoku Cloud, which means that it may continue growing. The markets could indicate that the price may test the upside border of the cloud at 1.2820 and then continue moving upwards to reach 1.2970. Another signal to confirm further ascending movement is the price’s rebounding from the rising channel’s downside border. However, the scenario that implies further decline may be canceled if the price breaks the downside border of the cloud and fixes below 1.2720. In this case, the pair may continue falling towards 1.2640,” as explained by the RoboForex Team.