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The Dollar Rises as Treasury Yields Surge

By:
David Becker
Updated: Jan 18, 2022, 19:17 UTC

Canadian housing starts fall more than expected

The Dollar Rises as Treasury Yields Surge

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On Tuesday, the dollar edged higher versus the Loonie. The softer than expected Canadian Housing Starts weighed on the Canadian currency. The U.S. 2-year and 10-year U.S. Treasury yields remained at elevated levels, both hitting pre-pandemic levels. In the U.S., interest rate traders are now pricing in 100-basis points of rate hikes in 2022.

Technical Analysis

The USD/CAD was nearly unchanged, edging slightly higher. Support is seen near the 200-day moving average at 1.25. Resistance is seen near the 10-day moving average at 1.2598. The 10-day moving average crossed below the 50-day moving average, which means a short-term downtrend is in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to a lower exchange rate.

Housing Starts Slide

Housing starts clocked in at 236,106 on an annualized basis, a 22% drop from November, the Canada Mortgage and Housing Corporation reported Tuesday. The agency also revised November’s data up from 301,279 to 303,813 units annualized.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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