The Canadian dollar has started the trading week on a high note. Currently, USD/CAD is trading at 1.2975, down 0.11% on the day.
Canadian dollar hits two-year high
The US dollar remains on the defensive, and that has been nothing but good news for the Canadian dollar, which has jumped on the bandwagon, as many of the major currencies have made significant gains against the struggling greenback. USD/CAD fell close to one percent last week, and on Monday, the pair dropped to a low of 1.2935, its lowest level since October 2018.
Canadian events mixed, GDP next
It’s a busy start to the week for Canadian events, after an abbreviated week without any Canadian releases. Building Permits continues to show volatility and plunged 14.6%, almost erasing the previous reading of 17.0%. Canada’s current account deficit narrowed to C$7.5 billion, down from C$8.6 billion. This marked the lowest deficit since June. On the inflation front, the Raw Materials Price Index posted a small gain of 0.5%, after a reading of 2.2% beforehand.
The Canadian dollar yawned at this batch of low-impact data, but it could be a very different story on Tuesday, with the release of GDP. Canada releases GDP on a monthly basis, rather than a quarterly basis. After a plunge of 11.6% in April GDP, the economy has reeled off four successive gains. However, the rate of expansion has been falling, suggesting that the recovery is tailing off. Analysts expect this trend to continue in the September GDP, with a weak gain of 0.9% expected. The GDP report should be treated as a market-mover, as an unexpected read could shake up the sleepy Canadian dollar.
- There is support at 1.2939. Below, there is a support line at 1.2885
- We find resistance at 1.3080, followed by resistance at 1.3167
- USD/CAD remains below the 20-day MA line