USD/CAD Slides as Protests Likely Reduce Canadian Economic Output

The dollar moved lower versus the Loonie as U.S. yields eased following soft consumer sentiment. The softer sentiment numbers are likely a function of surging inflation. On Thursday, the U.S. reported stronger than expected CPI, which helped the 10-year yield rise above 2% for the first time in 3-years. The interest rate differential slipped moving in favor of the Loonie, which weighed on the currency pair.

Technical Analysis

The USD/CAD moved lower against Loonie but remains rangebound. Resistance is seen near the 50-day moving average at 1.270. Support on the exchange rate is seen near the 200-day moving average at 1.2520. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The exchange rate moves toward oversold territory, reflecting accelerating negative momentum. Medium-term momentum is positive and decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a downward sloping trajectory which points to consolidation.

Vaccine Mandate Continue to Disrupt Canadian Economy

The protests of vaccine mandates in Canada continue to disrupt their economic output. Estimates range between 300-400 million CAD per day. The truck blockage on the U.S. border with Canada continues to generate problems for companies that use just-in-time inventory to manufacture products. Canadian truckers are protesting the countries COVID-19 restrictions and vaccine mandates throughout Canada. On Friday, there was news that protestors would open one lane for U.S. drivers.