The USD/CAD currency pair has been steadily climbing in the market, reversing the week-start pullback from the monthly top. This can be attributed to the cautious optimism that has been underpinning the WTI crude oil rebound, despite the sluggish session. This optimism is due to the easing of US-China tensions, as well as the hopes of an uptick in inflation and manufacturing activity in China. The US Dollar has also been on the rise, set to post its first monthly gain in five months due to the hawkish stance of the Federal Reserve.
In Canada, market participants are awaiting the release of the fourth quarter Gross Domestic Product (GDP) data. This could provide further impetus to the Loonie pair buyers, should the data come in line with the downbeat forecasts. Meanwhile, the US has released its Durable Goods Orders figures for January, which came in lower than expected at -4.5%. But the Nondefense Capital Goods Orders ex Aircraft grew 0.8%, above the 0.0% analysts’ expectations. The US Pending Home Sales also rose 8.0% MoM, beating the 1.0% expected. Canada’s Q4 Current Account Deficit also grew to -10.64B, higher than the -8.41B expected.
On the political front, the US is expected to forego expansive new restrictions on American investment in China, despite the fraying relations between the two countries. However, US National Security Advisor Jake Sullivan has warned of ‘real costs’ should China offer weapons support to Russia.
In the stock market, the S&P 500 Futures have been trading mildly higher around 3,995, following the week-start rebound from the monthly low. The US two-year Treasury yields have been hovering near 4.79%, while the US 10-year Treasury bond coupons have been seeking clear directions near 3.92%.
From a technical standpoint, the USD/CAD currency pair could remain on the bull’s radar, provided it does not drop below the previous resistance line from early November, around 1.3570. In the coming days, investors will be keenly watching the Canada’s Q4 GDP Annualized data, as well as the second-tier US data such as Conference Board’s Consumer Confidence, Chicago Purchasing Managers’ Index and Richmond Fed Manufacturing Index for February, as well as the preliminary US trade numbers for January.
Overall, the USD/CAD currency pair has been steadily climbing in the market, as the cautious optimism underpins the WTI crude oil rebound and the US Dollar remains on the path to posting its first monthly gain in five months. The release of the fourth quarter Canadian Gross Domestic Product (GDP) data and the US trade numbers for January could provide further impetus to the Loonie pair buyers. On the political front, the US is expected to forego expansive new restrictions on American investment in China, despite the fraying relations between the two countries. In the stock market, the S&P 500 Futures have been trading mildly higher around 3,995. From a technical standpoint, the USD/CAD currency pair could remain on the bull’s radar, provided it does not drop below the previous resistance line from early November, around 1.3570.
