USD/CAD Exchange Rate Prediction – The Dollar Rises on Strong Yield Move

The USD/CAD rallied as U.S. yields moved higher following a stronger than expected U.S. private payroll reprt. The Canadian trade deficit number was one of the largest on record the. Supply chain issues weighed on imports more than exports.

Technical Analysis

The dollar rallied against 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 1.2622. Short-term momentum has turned positive the fast stochastic generated a crossover buy signal. This occurred in oversold territory as the fast stochastic is printing a reading of 15, below the oversold trigger level of 20 which could foreshadow a correction. 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.

Canadian Trade Surplus Widened

Canada reported one of the largest trade surpluses at $1.94 billion Canadian dollars.  Supply chain disruptions appeared to have weighed more on imports than exports.  Exports rose a modest 0.8%, held back by weak vehicle and part shipments.  Imports fell by 1.4%.  Autos, aircraft, and other transportation equipment were important drags.  In volume terms, imports fell by 3.2%.