USD/CAD spikes 115 points on Monday

Note: This section contains information in English only.
Source: Dukascopy Bank SA


In general, the USD/CAD spiked up 115 base points and it is not clear why. There were no such moves on other USD assets, which indicates that it is the weakness of the CAD that caused the spike up.

Some news outlets attribute it to the comments on macroeconomic policy made by the Bank of Canada Deputy Governor Sharon Kozicki at a Webcast. However, that is nonsense, as the webcast took place on Friday, March 25th. The surge of the pair occurred starting from 11:00 GMT up to 14:00 GMT on Monday. Moreover, in the aftermath of the webcast most Canadian banks increased their forecast for rate hikes in Canada, which caused a strengthening of the Canadian Dollar during late hours of Friday's trading.

Meanwhile, among Canadian news headlines it was spotted that a new energy emissions law is about to be proposed to the Canadian Parliament. It could bet the case that the new environmental law was revealed to be harmful to the Canadian economy. Namely, if the law is set to reduce exports from the country, the demand for the Loonie in international trade is set to decrease.

The jump of the USD/CAD rate was stopped from a technical analysis perspective by the combination of the 1.2600 mark and the 200-hour simple moving average. The following decline had reached back to the zone near 1.2500 by the middle of Tuesday's GMT trading hours.

In regards to the near term future, if the pair passes below 1.2500, the March low level at 1.2467 might provide support, before the pair reaches the 2022 low level at 1.2450. On the other hand, a recovery of the USD against the CAD is expected to face resistance int he 50-hour simple moving average at 1.2510 and the weekly simple pivot point at 1.2526.
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