USD/CAD jumps from support to break Thursday's high

Technical Analysis

Author: Adam Button | usdcad

USD/CAD rallies from 1.3287

USD/CAD tried the downside in Asia-Pacific trading but couldn't get through the weekly low of 1.3287. From there it was a springboard to 1.3347, which was yesterday's high. It flirted with that level for the past few minutes before breaking above to 1.3351.
USD/CAD rallies from 1.3287

The market is pricing in virtually no chance of a BOC hike this year and about a 16% chance of a cut by year end.

Canadian jobs growth in the past six months has single-handedly kept the rate hike story and the Canadian dollar afloat. Those six months are the best six months of jobs growth since 2002.

The main downside risk for Canada at the moment is housing. Vancouver prices are down 4% in the past 7 months. That might look like a blip but if it can get up into the high single digits, that's when potential buyers start to move to the sidelines and wait it out. TD sees prices there down another 4.5% this year.

Australia has a lot of the same characteristics as Canada, including commodities and high home prices. The market there is looking for 70% chance of a cut by September.


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