The Dollar Continues to Rise Ahead of the Fed Decision
The dollar continued to rally versus the Loonie as the greenback gained traction against most major currencies ahead of the Fed decision on Wednesday. The Fed started a 2-day meeting on Tuesday and is expected to keep rates unchanged. Weaker than expected, Richmond Fed data, took some of the steam out of the 10-year yield, but the 2-year Treasury yield continued to rise.
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Technical Analysis
The USD/CAD rallied on Tuesday but remained caught between key support and resistance. Support is seen near the 10-day moving average on near 1.2545. Resistance is seen near the 50-day moving average at 1.2704. Short-term momentum has turned positive as 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. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to a higher exchange rate.
Richmond Fed Survey Points to Slowing Manufacturing
The Richmond Federal Reserve reported that the 5th district manufacturing activity softened in January. The composite index fell from 16 in December to 8 in January. In a separate report, S&P CoreLogic Case-Shiller National Home Price Index rose 18.8% year over year. The year-over-year gains decelerated as the October pace was a 19% annual gain.