Insights

Canadian Dollar/ US Dollar Weekly Update:

  • The Canadian dollar finished last week significantly lower as USD/CAD surged to last trade at 1.2366.
  • The decline in the Canadian dollar/rise in USD/CAD (blue) validated the long-term support zone (blue).
  • Previously oversold conditions are now being resolved (blue). The scope for further upside for the Canadian dollar/downside for USD/CAD is now further diminished.

 

Macro View

  • From the Federal Reserve Open Market Committee’s (FOMC) latest Monetary Policy Statement, released last Wednesday, “Progress on vaccinations has reduced the spread of COVID-19 in the United States. Amid this progress and strong policy support, indicators of economic activity and employment have strengthened.”
  • In actual fact, and similar to the U.S., Canada is also experiencing the impact from higher prices for shelter and vehicles, which in turn led to slower activities
  • China May retail sales +12.4% y/y, vs +17.7% y/y in April.
  • Eurozone consumer price index (CPI) eased to +0.3% m/m in May; April was +0.6%.

 

Conclusion

  • The prospect of the U.S. Federal Reserve ending their monetary stimulus earlier sent the U.S. dollar higher and commodity prices generally lower, taking the Canadian dollar with it. The latest batch of mixed to disappointing U.S. economic data, and recent Chinese measures to curtail commodity speculation might also be hurting risk appetite.
  • These macro headwinds for the Canadian dollar are taking place alongside long-term price patterns that suggest the scope for further upside for the Canadian dollar/downside for USD/CAD is now further diminished.

 

 

 

 

Share on linkedin
Share on facebook
Share on twitter
Share on print
Share on email

Recent Posts

The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.