USD/CAD: outlook for July 10-14

USD/CAD: outlook for July 10-14

The commodity-sensitive Loonie has appreciated to its strongest level since September (1.2910) due to surging oil prices and upbeat labor market data released on Friday.

Next week, traders will be focused on the Bank of Canada’s monetary policy meeting on June 12. Expectations for tightening have surged to 85% from just 4% a month ago as a number of hawkish comment from the BOC’s senior officials has increased in the past weeks. Some analysts believe that traders are overestimating the central bank’s willingness to raise rates. So, staying long in the loonie is not as clear cut as everybody thinks. Following the BOC’s monetary meeting the traders’ focus will shift towards Janet Yellen’s testimony scheduled for Wednesday-Thursday and the US inflation and retail sales data coming on Friday at 3:30 pm MT time. A positive oil market dynamics triggered by a possible decline in the US oil production or drops in inventory data will help commodity-linked Loonie to rise higher.

USD/CAD is trading around 1.2909 at the time of writing. There is a scope for extension towards 1.2820 (last September low). The odds for breaking lower levels is not high at this stage but the Bank of Canada’s rate hike could significantly improve them. On the upside, there are some resistances at 1.3015 and 1.3140.

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