US and Canada return from holiday
New York and Toronto are back from a three-day weekend and the theme is to buy the USA. The Canadian dollar is slumping alongside oil and that's boosted USD/CAD up to the best levels since June 18.
Throughout August, the pair struggled to break above 1.3340/50 but resistance broke today and the rally has continued to 1.3378.
The June 17 high of 1.3432 is the next level to note but all the early-week focus in this pair will be on the Bank of Canada's decision on Wednesday. We haven't heard from them since early July and there's a good chance they will set-up an October cut. There's even a slim chance of a surprise cut this week.
The Canadian dollar has held firm even as AUD and NZD fell nearly 15% this year. However it's been on the back of a remarkable string of surprisingly strong data points. At some point, that tailwind will fade and that's a big risk for the loonie.
