USD/CAD Exchange Rate Prediction – The Dollar Eases Despite Higher Yields

The USD/CAD declined as U.S. yields moved higher following larger U.S. trade deficit. The trade deficit number  was the largest on record the Commerce Department said. The rise in the deficit was due to higher iports into the U.S. The dollar was mixed against most major currencies.

Technical Analysis

The dollar eased against the Loonie, holding near support at an upward sloping trend line that comes in near 1.2550. Resistance seen near the 50-day moving average at 1.2621. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a lower trajectory which points to a lower exchange rate.

Imports Surge Driving Deficit to Record Highs

According to the U.S. Commerce Department, the trade deficit surged 4.2% to $73.3 billion in September, the highest since the government. Expectations were for the trade gap widening to $70.5 billion. When adjusted for inflation, the goods trade deficit increased $1.9 billion to $101.8 billion in August. Imports of goods rose 1.1% to $239.1 billion in August.