USD/CAD Exchange Rate Prediction – The Dollar Bounces Ahead of Canadian CPI

The USD/CAD edged slightly higher on Tuesday, despite broader dollar weakness ahead of Wednesday’s Canadian CPI report. U.S. Treasury yields moved lower following a softer than expected U.S. Durable goods report. According to the U.S. Commerce Department, business spending rose 0.5% last month. Expectations were for core capital goods orders to increased by 0.7% month over month. The release came along with the headline Durable Goods Orders report, which advanced 0.8% in June after rebounding 3.2% in May. The decline in the greenback came despite record housing prices in May.

Technical Analysis

The USD/CAD moved higher, bouncing into resistance near the 10-day moving average at 1.2593. Support is seen near the 100-day moving average seen near 1.2367. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram prints in negative territory with a declining trajectory which points to a lower exchange rate.

Home Prices Surge

The S&P CoreLogic Case-Shiller reports showed that home prices were 16.6% higher than in May 2020, the highest reading in the S&P CoreLogic Case-Shiller report’s 30-plus years. In April, it rose 14.8% year over year. S&P reported that the 10-city composite annual increase was 16.4% in May versus 14.5% in April. The 20-city composite gained 17% year over year, up from 15% the month before.