Solid News

USDCAD Market Update

2/22/2023 11:08 AM

During the Asian session, the USD/CAD pair is developing the "bullish" momentum formed yesterday.

The positive dynamics of the US currency are developing against the backdrop of macroeconomic statistics on business activity indices for February: Service PMI increased from 46.8 points to 50.5 points, better than forecasts for growth to 47.2 points, Manufacturing PMI – from 46.9 points to 47.8 points, ahead of market expectations of 47.3 points. Composite PMI for the same period increased from 46.8 points to 50.2 points, while the forecast increased to 47.5 points.

Inflation statistics exerted moderate pressure on the positions of the Canadian currency: in January, the consumer price index slowed down from 6.3% to 5.9%, which was lower than analysts' forecasts of 6.1%. The index rose by 0.5% MoM after a correction of 0.6% and an expected increase of 0.7%. The core index fell from 5.4% to 5.0%, while analysts expected it to rise to 5.5%. Investors took the statistics on inflation in Canada as a signal for a possible softening of the "hawkish" monetary policy of the national regulator. It is likely that after another rate hike in March, the Bank of Canada will take a wait-and-see attitude.

On the daily chart, Bollinger Bands are steadily growing: the price range is expanding but not as fast as the "bullish" sentiment develops. The MACD indicator is growing, keeping a strong buy signal (the histogram is above the signal line). Stochastic is pointing upwards but is near its highs, indicating that the US dollar may become overbought in the ultra-short term.

Resistance levels: 1.3550, 1.3600, 1.3650, 1.3700. | Support levels: 1.3500, 1.3450, 1.3400, 1.3350.

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