USD/CAD Exchange Rate Prediction – The Dollar Rebounds Despite Lower Yields

The dollar whipsawed and rallied versus the loonie.  Yields also moved lower and the yield curve flattened.  The markets are now adjusting to the potential for higher rates and at the same time the potential for the spread of the omicron variant of the coronavirus.

Technical analysis

The dollar traded higher versus the Loonie.  The exchange rate rebounded back through long-term resistance near an upward sloping trend line, but finished off the highs of the trading session. Support is near the 10-day moving average at 1.2783.  Additional support is seen near the 50-day moving average at 1.2552.  Short-term momentum has turned positive the fast stochastic generated a crossover buy signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in positive territory with a rising trajectory which points to a higher exchange rate.

U.S. Factory Output Rise More than Expected

The manufacturing output index climbed 0.7% in November to 100.6, the highest level since January 2019. That followed a 1.4% rebound in October. Expectations were for factory production to rise 0.7%. Output increased 4.6% compared to November 2020. Manufacturing accounts for 12% of the U.S. economy.