The US Dollar is gaining against the Canadian Dollar but still moves within a downward trend. The USD/CAD pair is currently only 0.14% higher than Friday’s market close and is struggling to form an official “higher high”. The large swing witnessed within the day is actually against the US Dollar but markets are also waiting for the reaction after the US session opens.
The price movement was experiencing a strong upward trend until the 20th June when the price had reached a significant resistance point. The exchange rate of 1.3053 had previously been the point of collapse in April. However, the rate is higher than the 1.2965 rate which had become a source of struggle for the US Dollar since December 2020. Currently, the price has retraced down and traders are looking to see if the price will fully correct or if it can build momentum again.
The most influential factors of the past couple of days have been the Canadian economic releases. Last week, the country published their latest CPI figure which confirmed the highest inflation rate since the 1980s. The CPI figure was confirmed as 1.4% which was 0.4% higher than expected, and 0.8% higher than the previous month. The government confirmed a 9.7% increase in food prices, the cost of petrol climbed 12% within the month and 48% year-on-year. High inflation is primarily caused by the increase in crude oil.
The market also took note of a survey by the Angus Reid Institute. The survey recorded a decline in the standard of living of the population, approximately half of the 5,000 participants advised of a significant deterioration in their financial condition compared to the same period in 2021, as well as the inability to pay rental obligations and general bills. Almost one third of the participants also stated that they are preparing for future financial difficulties in the coming months. The survey signaled an overall drop in confidence amongst citizens, and traders are now evaluating how investors are likely to react to this.
The US Dollar index had slightly declined during the morning session but has since increased to the market open price. The US Dollar has not shown high levels of volatility nor any specific direction so far. It had strongly increased in the first three weeks of the month, but it is now possible for the currency to lose steam until further driving factors force further trends.
No major announcements are expected to be released for either the US or Canada. However, the US will release 2 economic figures which are considered to be of medium importance. This includes Pending Home Sales which is predicted to decline by -3.5% and Durable Goods Orders predicted to decline to 0.1%. Tomorrow, the US will also release their Consumer Confidence Index which is known to have a stronger influence on the market.
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