Canadian dollar

Canadian $ Futures (6C) Slips Despite Soaring WTI, Hawkish BoC

  • In response to a stronger US dollar, the Canadian $ (6C) fell from 0.7985 to 0.7930.
  • A less aggressive than expected meeting by the ECB prevented higher oil prices from helping the CAD.
  • Hawkish BoC could not help the bulls as the US dollar remains broadly stronger against its rivals.

After rising to fresh weekly highs during the session, Canadian $ (6C) is expected to end the day around 0.7900, down from Friday’s high of 0.7985.

A less hawkish-than-expected ECB monetary policy statement on Thursday changed the tone of the currencies market, with the US dollar strengthening across the board, also helped by a sharp rise in US yields.

Mixed US economic data in March and a stronger-than-expected Michigan consumer sentiment survey did not seem to have a significant impact on the Fed’s tightening or subsequent currencies market sentiment. John Williams, a member of the FOMC and president of the New York Fed, also supported a 50-basis point rate hike at the next meeting.

The Canadian $ (6C) futures dipped slightly towards the pre-BoC levels amid greenback strength. The Canadian $ (6c) could not benefit from further gains in global crude oil prices. Remember that the Bank of Canada hiked rates by 50 basis points and initiated its QT program (as of April 25) as expected, but also hinted at another 50 basis point hike.

The Canadian dollar bears are not losing hope. The US dollar remains as strong as it has been for several weeks, despite an even more hawkish Bank of Canada and resilient global commodity prices.

What’s next to watch?

Europe and North America will be closed on Friday for the Easter holidays, so trading volumes will be very light during the London and New York sessions.

The Canadian dollar (6C) daily futures open interest

Canadian $ (6C) daily open interest
Canadian $ (6C) daily open interest

The Canadian $ (6C) rose slightly on Thursday. Meanwhile, the daily open interest dropped from 153686 contracts to 151458 contracts. This is a huge fall. It shows that the bulls are not strong enough, and the bears will keep an edge during the coming days.

Canadian $ (6C) price technical analysis: Ranging behavior

Canadian $ (6C) 4-hour chart

The Canadian $ futures (6C) remains supported by the 100-period SMA (orange line) on the 4-hour chart. However, the price remains rangebound between 100-period SMA (orange line) and 200-period SMA (red line). The volume data is also suggesting a consolidation phase.

So, you should patiently watch for the breakout of the range to find a trading opportunity. The upper band of the range lies at 0.7980, while the lower band is at 0.7910.