Canadian Dollar Talking Points
USD/CAD[1] extends the advance from the monthly low (1.2365) as the US Dollar[2] gains on the back of waning investor confidence, but lack of momentum to push back above the 50-Day SMA (1.2644) may keep the exchange rate within the March range like the price action from earlier this month.
USD/CAD to Track Monthly Range Amid Failure to Hold Above 50-Day SMA
USD[3]/CAD[4] attempts to trade back above the 50-Day SMA (1.2644) as the 10-Year Treasury yield climbs to a fresh yearly high (1.77%), and key developments coming out of the US may continue to prop up the exchange rate as Non-Farm Payrolls (NFP[5]) are projected to increase for the third consecutive month.
Current market forecasts show the US economy adding 639K jobs in March, while the Unemployment Rate is expected to narrow to 6.0% from 6.2% the month prior. A further improvement in the labor market may spark a bullish reaction in the US Dollar as it encourages the Federal Reserve to further upgrade its economic outlook, but it remains to be seen if the Federal Open Market Committee[6] (FOMC) will adjust the forward guidance later this year as Governor Lael Brainard[7]warns that “the K-shaped labor market recovery remains uneven across racial groups, industries, and wage levels.”
In turn, the FOMC may stay on course to “increase our holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month” as the central bank lays out an outcome based approach for monetary policy, and the advance from the monthly low (1.2365) may turn out to be a correction in the broader trend rather than
