Canadian Dollar Forecast: USD/CAD Bounces from 1.3600 Support, Key Data Looms
- A strong Consumer Confidence report and a 3-week high in the 10-year bond yield is driving the US dollar higher.
- USD/CAD bulls are likely to emerge to defend the 1.3605 level, potentially leading to a bullish breakout from the descending channel and opening the door for a move back toward 1.3800.
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Thursday’s US GDP revision, along with Friday’s combination of the US Core PCE report and Canadian GDP reading for March, will be the key fundamental data releases to watch for USD/CAD traders.
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The FX market remains relatively quiet on the first “real” trading day of the week, with a touch of broad strength in the US dollar standing out as the most notable development. The rally in the greenback is being driven by rising US Treasury yields, which in turn can be chalked up to two key developments.
First, this morning’s Conference Board Consumer Confidence reading came in much stronger than anticipated at 102.0 vs. 96.0 expected; last month’s reading was also revised up to 97.5. Secondly, today’s US treasury bond auctions both saw 1bp tails, indicating demand for bonds was lower than expected and pushing up bond yields. Between a stronger-than-anticipated consumer and the 10-year bond yield hitting its highest level in more than three weeks, the US dollar is the clear beneficiary.
Canadian Dollar Technical Analysis – USD/CAD Daily Chart
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