USD/CAD Bears Eye US CPI as Canadian Economy Shines
The USD/CAD exchange rate has been trading on the back foot on Monday, despite the US Dollar regaining some ground after last week's soft NFP data. The Canadian Dollar is drawing support from stronger-than-expected domestic labour data and rising Oil prices, with WTI currently trading at $80.37 per barrel, up 5.20% on the day.
According to TD Securities, the recent payrolls data 'broke USD/CAD below 1.40', highlighting that the market remains focused on central-bank divergence and Canada's domestic outlook. The bank notes that while the Canadian economy is evolving broadly in line with their forecasts, they think the bearish USD momentum may not sustain unless US CPI also surprises lower.
From a technical perspective, USD/CAD has formed a series of lower highs and lower lows since briefly rising above 1.4200 in late June. The pair holds below the 1.4000 psychological mark and the 50-day Simple Moving Average at 1.4075, keeping the near-term bias tilted to the downside.