Third day of gains for USD/CAD
The combination of US dollar strength on a hawkish Fed and plummeting commodity prices have led to a rapid rise in USD/CAD.
The pair touched 1.2399 today, which is the highest since April 27.
There's a downtrend in play along wit hthe old low from March and the 100-day moving average at 1.2424.
I think this is the level to wade into shorts but watch oil closely. I continue to think oil is vulnerable to a retracement down to $67 per barrel, if not lower. It's holding up today though and it's been an amazing run for crude.
I don't think the reflation trade is dead. What really changed from the Fed? Yes, the talk is a bit different but the taper timeline hasn't materially shifted and if you believe that inflation in 2022 will be lower than the 2.5-3.0% range that Bullard outlined, then rates will stay low.