Published on May 9, 2023

Daily Analysis For USD/CAD 09-05-2023

USD/CAD Analysis

Economic Events and Scenario for USD/CAD

Economic Events : -

GMT	Event	Impact	Currency
00:01	(United Kingdom) BRC Retail Sales Monitor YoY	High	GBP
00:30	(Japan) Overtime Pay YoY	Low	JPY
00:30	(Japan) Average Cash Earnings YoY	Low	JPY
00:30	(Japan) Household Spending MoM	Low	JPY
00:30	(Japan) Household Spending YoY	Low	JPY
01:00	(Euro Area) Anniversary of Robert Schumans Declaration	None	EUR
01:00	(Luxembourg) Europe Day	None	EUR
02:30	(Australia) Retail Sales MoM	High	AUD
04:00	(China) Exports YoY	Medium	CNY
04:00	(China) Imports YoY	Medium	CNY
04:00	(China) Balance of Trade	High	CNY
04:35	(Japan) 10-Year JGB Auction	Low	JPY
04:35	(Japan) 6-Month Bill Auction	Low	JPY
07:00	(Lithuania) CPI	Low	EUR
07:00	(Lithuania) Inflation Rate MoM	Low	EUR
07:00	(Lithuania) Inflation Rate YoY	Low	EUR
07:00	(United Kingdom) Halifax House Price Index YoY	Medium	GBP
07:00	(United Kingdom) Halifax House Price Index MoM	Medium	GBP
07:45	(France) Current Account	Low	EUR
07:45	(France) Balance of Trade	Medium	EUR
07:45	(France) Exports	Low	EUR
07:45	(France) Imports	Low	EUR
08:00	(Slovakia) Balance of Trade	Low	EUR
08:30	(France) Foreign Exchange Reserves	Low	EUR
09:00	(Euro Area) ECB Lane Speech	Low	EUR
09:40	(Spain) 6-Month Letras Auction	Low	EUR
09:40	(Spain) 12-Month Letras Auction	Low	EUR
10:30	(Germany) 5-Year Bobl Auction	Low	EUR
10:30	(Australia) 2023-24 Federal Budget	Medium	AUD
11:00	(United Kingdom) BBA Mortgage Rate	Low	GBP
11:00	(Ireland) Industrial Production YoY	Low	EUR
11:00	(United States) NFIB Business Optimism Index	Low	USD
13:30	(United States) Fed Jefferson Speech	Medium	USD
13:55	(United States) Redbook YoY	Low	USD
14:00	(France) 3-Month BTF Auction	Low	EUR
14:00	(France) 12-Month BTF Auction	Low	EUR
14:00	(France) 6-Month BTF Auction	Low	EUR
15:00	(United States) IBD/TIPP Economic Optimism	Medium	USD
15:30	(United States) NY Fed Treasury Purchases 0 to 1 yrs	Low	USD
17:05	(United States) Fed Williams Speech	Medium	USD
18:00	(United States) 3-Year Note Auction	Low	USD
18:00	(Euro Area) ECB Schnabel Speech	Low	EUR
21:30	(United States) API Crude Oil Stock Change	Medium	USD

Today's Scenario: - During early Tuesday, USD/CAD fell to a new intraday low near 1.3365, unable to sustain the rebound it made at the start of the week. The pullback could be attributed to the US dollar struggling to maintain previous gains as markets adopt a cautious approach before the US debt-ceiling talks in the White House. Additionally, the mildly positive tone of WTI crude oil, which is a crucial export for Canada, also adds to the bearish pressure on the currency pair.

The US Dollar Index (DXY) retreats to 101.42, consolidating its intraday gains, which were not bolstered by the unimpressive details of the Federal Reserve's (Fed) quarterly bank loan survey. However, the greenback's decline is limited by optimistic US inflation expectations, as seen in the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) data. The bullish sentiment is offset by concerns about the bleak economic outlook if the US fails to extend the debt ceiling.

Buy Scenario: - On the upside, if USD/CAD continues to rebound, it may target the 200-day moving average hurdle around 1.3450. However, buyers will require validation from the 100-day moving average level of about 1.3520 to aim for the previous monthly high of around 1.3670. If USD/CAD manages to remain strong beyond 1.3670, it could rally towards the yearly high of nearly 1.3860. Till we do not advise to buy USD/CAD.

Sell Scenario: - USD/CAD is trading around the 1.3370-80 level and struggling to hold on to the rebound seen on the previous day from the short-term key support line. Despite the recent lack of action, the Loonie pair is still off the bear's radar, supported by the Dragonfly bullish Doji candlestick posted on Monday and the nearly oversold RSI (14) conditions.

To maintain this positive outlook, USD/CAD needs to hold above the upward-sloping support line from November 2022, currently near 1.3315. Furthermore, the 1.3300 round figure also acts as downside support. In case of a breakdown below these levels, February's bottom at 1.3265 and the late 2022 trough around 1.3240 may also come into play. Till we do not advise to sell USD/CAD.

Support and Resistance Level: -