The rates continue in an uptrend, but it has been losing momentum since the end of the rally in US interest rate. However, we can still see the Canadian dollar losing ground over the past few weeks as oil is stuck in a range below $80 with an uncertain outlook while macroeconomic reports in Canada show a recession.
According to analysts, the Canadian dollar has good perspective against the backdrop of global economic recovery and rising demand for risky assets. In confirmation of this, they point to Strong macroeconomic reports in China, which improve forecasts for demand for oil and other raw materials. This is certainly very important for the Canadian dollar, but has not yet been reflected in the Canadian economy.
The US macroeconomic reports are better: we can see strong reports on unemployment and consumer demand. At the same time, high inflation stimulates the Fed to raise the rate, which by the end of 2023 could reach an incredible 6%. Under these conditions, it will be difficult to compete with the USD. Hope remains for oil prices to rise, which will certainly support the CAD, but there is no guarantee that this will happen. So far, oil is at the stage of consolidation, and the market reacts poorly to reports from China. At the same time, stocks in the US remain at a high level, which puts pressure on oil.
Next week will please those who invest in the Canadian dollar, cos the market is waiting for the publication of the trade balance in China and the United States, the index of business activity and the unemployment report in Canada, but most importantly - there will be a meeting of the Bank of Canada, which is expected to increase the rate by 50 pips. So Canada will be the driver next week. Therefore, our choice today - short-term deals in favor of the Canadian dollar. The Macd, the stochastics confirm our decision to Sell today.
