Dealers continue to flock towards the Canadian dollar. Buoyed by rising commodity prices of its major exports, the loonie also finds favor from global central banks and governments as a solid bet. The Canadian government might well be the first amongst G7 governments to return to a balanced budget within five years. The Canadian unit stands at 99.88 U.S. cents having peered through parity earlier to reach $1.0005 cents. The unit has taken just about six months to cross its own little line in the sand against the greenback.
Subdued inflationary pressures would confirm the market’s doubts that the Bank of Canada would be willing to continue the campaign of interest rate hikes for the rest of the year. The inflation gauge could see a small increase by 0.1% m/m, compared with the 0.1% m/m decline in the previous month.
If the expected Dollars reversal is in place in upcoming week, then the bullish USD/CAD can be expected.
Daily Usd/Cad Chart
The usd/cad is expected to be capped near 0.9930-0.9950. A breaching of the 1.0150 (Marked in red line) will confirm its reversal toward 1.0600 level.
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