The Canadian dollar’s advance continues. Neither the widening of interest rate differentials in the US favor nor a poor employment report has managed to buckle the Loonie. Oil and the general risk-on mood trump the other concerns.
In addition, investors are concluding that fiscal stimulus will reduce the possibility of additional monetary stimulus. The implied yield on the June BA futures is now the highest since last June.
The Great Graphic, made on Bloomberg shows the greenback’s uptrend since mid-2014. The 10.4% US dollar slide since the multi-year high was reached in late-January, has brought it within striking distance of that trendline, which is found near CAD1.3140 today. A break would target CAD1.30 initially.
Earlier this week, I expressed my concern for the outlook for the Canadian dollar. I remain concern, believing overtime the interest rate differential exerts gravitational pull. However, discipline requires respecting the price action. From a technical perspective, the break of the trendline is significant.
