USD/CAD Rallies Amid Rising Yields Despite Robust Canadian Jobs Data 

Insights

• The dollar strengthened against other major currencies.
• Benchmark yields climbed higher amid hawkish Fed policy.
• Gold and silver prices traded flat.
• Oil prices continue to fall as EIA countries plan to release reserves.

The dollar extended gains against the Loonie as hawkish Fed commentary and FOMC minutes generated a rally in yields. Benchmark yields rose several basis points. The 10-year yield surged to 2.7%, the highest level since March 2019. Gold and silver prices traded flat as Fed rate tightening weakens their appeal. 

The dollar extended gains, underpinned by the Fed’s aggressive tightening policy. Oil prices dropped for the second week in a row on members states of the International Energy Agency (IEA) plan to release reserves over the next six months.

Wholesale inventories, the stock of unsold goods by wholesalers, were revised higher in February. Wholesale inventories rose 2.5% in February compared to 2.1%, which was reported the previous month. Although inventories are a critical part of GDP, they did not raise GDP in the first quarter.  

Technical Analysis

The USD/CAD tests the 200-day despite strong Canadian jobs data. The Fed’s  tightening policy generated a rally in yields, which underpinned the dollar. The Fed’s tightening favors USD bulls. Resistance is seen near the 200-day moving average near 1.261. Support is seen near the 10-day moving average near 1.252. 

Short-term momentum is positive but decelerating as the fast stochastic had a crossover buy signal. The medium-term momentum turned positive as the MACD line generated a crossover buy signal. The MACD line (the 12-day MA minus the 26-day MA) crossed the MACD signal line (the 9-day MA of the MACD line).