The USD CAD extended its losses this week fueled by news that theCanadian inflation rate is under control and in anticipation of a U.S.sovereign debt reduction. Technically, this pair is on pace to test 1.1059.
The USD CAD extended its losses this week fueled by news that the Canadian inflation rate is under control and in anticipation of a U.S. sovereign debt reduction.
Earlier in the week the Canadian government reported that inflation was inline with expectations. This meant that the Bank of Canada would not have to apply quantitative easing to boost the economy. This action which is basically printing money was perceived as bullish for the Canadian Dollar.
Later in the week, short-traders aggressively sold the U.S. Dollar in anticipation of a reduction in the U.S. debt rating. The expanding U.S. debt burden is raising concerns over the U.S. Treasury’s ability to fund its debt obligations.
Based on the current chart pattern, the USD CAD is on pace to test a major retracement zone at 1.1059 to 1.0586. There could be profit-taking at this level or at the least a technical bounce. Don’t anticipate anything until this zone is tested and momentum can be judged.