The Canadian dollar is in a retracement phase after taking a beating in the first month of the year. USD/CAD has fallen in 9 of the past 11 days but the Feb low of 1.0968 is holding so far, yesterday’s low of 1.0976 is also holding but only barely.
The ebb and flow of this pair will be dictated by US data, emerging markets and broad risk sentiment with no tier-1 Canadian economic data on tap until next Friday. One number to watch will be CPI numbers from China on Friday. Inflation creeping lower and expected to fall to 2.4% from 2.5% previously. A sharper fall in prices could prompt talk of a rate cut or more stimulus, which would boost risk assets and the loonie.
Technically, I see this as a standard retracement and I will look to buy closer to the 61.8% retracement and the 55-day moving average with stops below.
USDCAD daily
