Canadian Dollar (CAD) Struggling Against the US Dollar, Running Over The Euro
Canadian Dollar Price, Chart, and Analysis
- The Canadian dollar is trying its halt the slide against a strong US dollar
- EUR/CAD remains near a four-and-a-half-year low.
- US data is now key to the next move in the US dollar.
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The Canadian dollar is having a testing time against a rampant US dollar and things may get worse for the Loonie if upcoming US inflation data reinforce market expectations of a series of US interest rate hikes next year and beyond. In a week shortened by the Thanksgiving holiday in the US on Thursday, and a half-day market session on Friday, today’s US data releases, and the latest FOMC minutes, are likely to set the tone for the greenback in the coming days.
The Canadian dollar is one of a number of major currencies weakening against the US dollar as US rate hike expectations continue to ramp up. The rate-sensitive US 2-year currently trades with a yield of just under 0.60%, while the benchmark US 10-year is offered with a yield of 1.65%, just 8 basis points below the recent multi-month high of 1.73%. The daily chart shows a series of lower highs off the August 20 high at 1.2949, highlighting the recent weakness in the pair. The recent ‘V’ shaped rebound from the October 21 low may have now played out, in the short-term at least, leaving the pair looking to establish a range.
Canadian Dollar (USD/CAD) Daily Price Chart November 24, 2021
Retail trader data show 58.97% of traders are net-long with the ratio of traders long to short at 1.44 to 1. The number of traders net-long is 5.60% higher than yesterday and 17.18% lower from last week, while the number of traders net-short is 3.46% lower than yesterday and 25.63% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USD/CAD trading bias.
EUR/CAD has been a one-way trade of late with the combination of a weak Euro and a relatively strong Loonie sending the pair tumbling ever lower. The pair are back at lows last seen in early 2017 and the weekly chart suggests that there is little in the way of support until 1.4053 hooves into view. Any upside in the pair is likely to remain limited and driven by the Canadian dollar as the outlook for the Euro remains weak with the ECB some way behind other major central banks who are looking to hike rates imminently.
Canadian Dollar (EUR/CAD) Weekly Price Chart November 24, 2021
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