CAD: Technical indicators are out of sync - BBH

On the back of a disappointing retail sales report, the Canadian dollar recorded new lows for the year on February 22 at the equivalent of CAD1.2755, notes Marc Chandler, Global Head of Currency Strategy at BBH.  

Key Quotes

“A firm inflation report ahead of the weekend saw the US dollar slump to CAD1.2620 and end a five-day advancing streak.  The technical indicators are out of sync with each other.  Support for the greenback is pegged near CAD1.2570 now. The Bank of Canada hiked rates three times since the middle of last year, the Fed only once.  This year, Canada will be unable to keep up with the US.  The two-year rate differential is already back to where it was before the first hike was delivered by the Bank of Canada last July.  While the short-term outlook may not be clear, the medium-term outlook seems to support the US dollar.”