USD/CAD Analysis Report: worst daily decline above 1.3500 since 2016; emphasis on BOC’s Macklem US inflation

Nov 07, 2022

VOT Research Desk

Following a gap-up beginning, USDCAD is stagnant near 1.3530 as bulls look for new cues ahead of Monday’s European session.

The recent strengthening of the Loonie could be attributed to the decline in WTI Crude Oil, Canada’s principal export, as well as the risk-off sentiment.

The recent flash catalysts from Canada and the US presented a challenge to the pair buyers, though.

The market’s most recent risk aversion may be related to recent worries about China’s tighter border controls and Russian geopolitical tensions.

Concerns about the US Federal Reserve’s (Fed) next move are varied, in part because of the recently conflicting US jobs report. Looking to the future, Thursday’s data, which includes the US Consumer Price Index (CPI) and a speech from Bank of Canada (BOC) Governor Tiff Macklem, seems to be the most important one for traders of the USDCAD pair.

If recent discussions of the Fed’s turn and the positive Canada jobs report pan out as expected, both of these developments could persuade bears.

For the USDCAD bears, a consistent daily close below the 50-DMA, which is currently at 1.3500 at press time, is required.