Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Scotiabank, ING bearish on Loonie as Canadian dollar loses further ground vs. USD

Published 01/17/2024, 06:28 PM
Updated 01/17/2024, 06:28 PM
© Reuters.

By Ketki Saxena

Investing.com -- The Canadian Dollar continued to weaken against its US counterpart today, rising treasury yields, rising risk aversion, and hotter-than-expected retail sales boosted the safe-haven greenback. 

However, the Canadian dollar continued to see some gains against most major currencies, even as a dip in crude and metal prices following weak Chinese data pressured the commodity-linked loonie. 

Low-impact inflation data from Canada also helped assuage some fears after yesterday’s hotter-than-expected core Canadian CPI read.

Canada’s Raw Material Price Index fell 4.9% in December, well below the forecast for a 1.6% decline. 

Canadian Industrial Product Prices also declined in December, falling 1.5% vs. the forecast of -0.7%.

US data meanwhile came in hotter than expected, with retail sales up 0.6% in December, vs market forecasts for a 0.4% gain. 

With the US domestic economy showing repeated signs of strength, traders have been paring back bets for early rate cuts from the Fed, boosting the US Dollar across the board.

Analysts at Scotiabank (TSX:BNS) believe that “If markets continue to reprice March Fed risks, the USD is likely to remain well-supported.”

ING analysts concur that “Incoming US data should continue to be a key driver for CAD in the crosses, given its high correlation with US economic sentiment.”

Up next for the USDCAD pair, all eyes will be on the Bank of Canada’s meeting next week. 

Analysts at ING note that the “residual resilience in US data may be offset by a more dovish BoC… we see a high chance that it will follow the Fed in signaling rate cuts by year-end, thus dropping its tightening bias.”

However, they “Remain unexcited about CAD’s prospects”.

On a technical level for the pair, Scotiabank analysts note that "Solidly bullish intraday and daily trend strength signals suggest the USD rebound, signaled by bullish price action around the turn of the year, has further to run still”

 “Above 1.3540/1.3550, USD gains are liable to run on to the low/mid-1.36 range."


Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.