USD/CAD Surges Along with U.S. Treasury Yields
The dollar moved higher against the Loonie as U.S. yields surged, pushing the yield differential in favor of the Greenback. The USD/CAD remains in its February range. U.S. benchmark yields surged higher above 2%. U.S. initial jobless claims came in at 223,000 for the week ended February 5. U.S. CPI came in hotter than expected, hitting the highest levels in 40-years
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Technical Analysis
The USD/CAD moved higher against Loonie but remains rangebound. Resistance is seen near the 50-day moving average at 1.271. 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 as the MACD (moving average convergence divergence) index generates a crossover buy signal, but momentum decelerates. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) converges to the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with a downward sloping trajectory which points to consolidation.
U.S. Inflation Steel the Show
U.S. CPI rose more than expected rising 0.6% month over month compared to 0.4% expected. According to the Labor Department, annualized inflation was the hottest since 1982. CPI increased by 7.5% year over year compared to expectations that it would rise by 7.2%. Core inflation which strips out food and energy, increased by 6%, also the fastest rise in core inflation since 1982. The increase in inflation was driven by food, electricity, and shelter costs.