- The dollar started the week strong as markets reacted to Trump’s pick for Treasury secretary.
- Inflation in Canada rose 0.4%, above estimates of 0.3%.
- Retail sales in Canada jumped 0.4% in September.
The USD/CAD outlook shows the pair recovering as the greenback rises after Trump picks a new Treasury secretary. However, the pair remained close to the lows seen last week when the Canadian dollar surged following upbeat economic data.
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The dollar started the week strong as markets reacted to Trump’s pick for Treasury secretary. Scott Bessant was a supporter of Trump’s tariff policy proposals. Moreover, he has openly supported a stronger dollar, making his nomination a bull for the currency.
Markets are paying close attention to developments in the US following Trump’s victory. The president-elect will take office in January and could begin pushing for policy changes. Experts noted that the Republican Party holds a majority of seats in both houses of Congress, making it easier for Trump to make policy changes.
Meanwhile, the Canadian dollar gave up some of last week’s gains but remained close to its highs. The loonie had a strong week as economic data reduced the likelihood of another big rate cut in December. The Bank of Canada cut borrowing costs by 50 basis points in October as data showed slower economic growth. Moreover, policymakers have signaled more rate cuts in the future, prompting markets to price in another huge move.
However, last week’s data showed inflation rose 0.4%, above estimates of 0.3%. At the same time, retail sales in September jumped by 0.4%, while the basic figure increased by 0.9%. Moreover, estimates showed an increase of 0.7% in October. As a result, markets have discounted the likelihood of another 50 basis point rate cut in December.
USD/CAD Key Events Today
The pair could start the week slowly, as traders do not expect key reports from Canada or the US.
USD/CAD Technical Outlook: Bears are preparing for a break below 1.3951
From the technical side, USD/CAD price paused near the 1.3951 support level. However, the bias is bearish as it trades below the 30-SMA, with the RSI in bearish territory. The trend recently reversed when the price paused at the 1.4100 resistance level.
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The bears confirmed the reversal when they pushed below the 30-SMA and the bullish trend line. However, they must now make lower highs and lows to continue the downtrend. Therefore, USD/CAD could break below 1.3951 to retest the 1.3850 support level.
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