USD/CAD to move lower for a test of the 1.2385 mark – DBS Bank

USD/CAD is revisiting its year’s lows, oiled by last Friday’s blowout February Canadian jobs data where 259K jobs were created (Bloomberg consensus 75K). Mapped against its trade weighted index, CAD remains in good posture to see further gains, Benjamin Wong, Strategist at DBS Bank, reports.

Key quotes 

“USD/CAD is already on a retest of its 2021 lows, following last Friday’s blowout Canadian February jobs data where the domestic economy added 259K jobs in February against a Bloomberg consensus of 75K. The decline is consistent with our navigation path. It is clear from the mapping that unless USD regains posture over 1.2957, a move lower in the works would occur as in our prior guidance on 24 January.”

“USD/CAD over CAD effective rate index vs other important trading partners usually converge over time. At this juncture, there is a gap to close – this should continue to undermine USD vs CAD.”

“The general direction continues to favour a bear USD thrust with 55-day moving average at 1.2703 and the cloud resistance at 1.2808.”

“What lies ahead is another Fibonacci marker break at the 61.8% projection of 1.3390-1.2588 around 1.2385. A break of this level places attention on January 2018’s 1.2251 lows and support coming in 1.2280.”