USD/CAD Price Outlook – Sinking Lower Ahead of Important Risk Events
USD/CAD Price, Chart, and Analysis
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A busy session for USD/CAD traders with data and event releases that could impact both sides of the spread. Canadian inflation and US retail sales, both for January, are released both released at 13:30 GMT, while later in the session the minutes of the last FOMC meeting will also be released. All three events have the potential to move the pair and should be closely followed. It will be interesting to see in the FOMC minutes if the central bank rows back any of chair Powell’s hawkishness at the January 26 monetary policy meeting.
For a list of all market-moving data releases and events see the DailyFX Economic Calendar
USD/CAD has been controlled by the constant shift in risk appetite over the last three weeks. The Ukraine crisis put a small bid under the US dollar but gave oil a much larger leg-up, helping the Loonie strengthen further. With mixed messages coming from both Russia and NATO on a regular basis, it remains to be seen if this crisis is any closer to being resolved.
The daily chart shows how conflicting risk forces have kept USD/CAD confined in a 1.2635 to 1.2800 range over the last three weeks. The pair is currently moving towards support, with the Canadian dollar aided by a strong oil complex, while the US dollar remains underpinned by a robust rates background where the US 2-year offers a near two-and-a-quarter year high yield of 1.57%. This range will need a strong driver if it is to be broken and as such will likely hold in the short-term barring any strong data beat or macro surprise.
USD/CAD Daily Price Chart February 16, 2022
Retail trader data shows 60.95% of traders are net-long with the ratio of traders long to short at 1.56 to 1. The number of traders net-long is 3.38% lower than yesterday and 13.00% lower from last week, while the number of traders net-short is 2.66% lower than yesterday and 3.87% 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long.
What is your view on the USD/CAD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.