USD/CAD Exchange Rate Prediction – The Dollar Eases as Yields Slip

The USD/CAD moved lower as the downward trend in the loonie remain intact. The move in the dollar comes as Treasury yields slipped. Stronger than expected PMI pricing in the United States along with weaker than expected construction spending provided the consolidative tone in the market place. construction spending dropped 0.5% after edging up 0.1% in August. Expectations were for construction spending to gain 0.4%.

Technical Analysis

The dollar eased on Monday. The exchange rebounded tested support near 10-day moving average, 1.2360. Resistance is seen near the 50-day moving average at 1.2558. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is about to turn positive as the MACD (moving average convergence divergence) index is generated a crossover buy signal. This 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).

Forward-Looking Data Points to Slowing Growth

The ISM survey’s forward-looking new orders sub-index dropped to 59.8 last month, the lowest reading since June 2020, from 66.7 in September. U.S. manufacturing activity slowed in October to a 16-month low. The Institute for Supply Management reported on Monday its index of national factory activity slipped to a reading of 60.8 last month from 61.1 in September. Expectations were for the index to fall to 60.5. The ISM survey’s forward-looking new orders sub-index dropped to 59.8 last month, the lowest reading since June 2020, from 66.7 in September.