British Pound Outperforms, Canadian Dollar Lags Behind
The British Pound rallied against the greenback for the second-day and is the best performing currency amongst the majors on Wednesday, but the overnight advance appears to have stalled ahead of 1.5300 as the intraday relative strength index falls back from overbought territory. The GBP/USD is nearly 70pips higher from the open after moving 77% of its average true range and there certainly remains scope for the pair to push higher throughout the North American trade, but at the same time the advance appears to have lost steam as the 30-minute RSI falls back from a high of 73. As a result, we could see the pound-dollar pare the rally and fill-in the gap from the 240-SMA 91.5123) going into the Asian trade, but the 120-SMA (1.5101) looks poised to cross above the 240-SMA and the bullish crossover could lead the pound-dollar to push higher over the remainder of the week.
The Canadian dollar pared the previous day’s advance following a shift in market sentiment, with the USD/CAD rising to a high of 1.0371, and the commodity currency may continue to lose ground throughout the U.S. session as investors scale back their appetite for risk. The USD/CAD is nearly 40pips higher from the open after moving only 63% of its ATR, and the exchange rate may continue to push higher throughout the day as risk sentiment continues to drive price action in the foreign exchange market. However, the lack of momentum to break above the 240-SMA at 1.0375 could lead the dollar-loonie to pare the overnight advance and keep price action around the 120-SMA at 1.0332. Nevertheless, as investors speculate the Bank of Canada to normalize monetary policy further in the second-half of the year, expectations for a rate hike is likely to bear down on the USD/CAD over the near-term as the Federal Reserve maintains its pledge to keep borrowing costs at the record-low for an “extended period” of time.
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