Canadian dollar gains vs. USD as risk-on mood, crude gains boost Loonie By Investing.com
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Investing.com – The strengthened against its US counterpart today, gaining support from upbeat sentiment following US GDP data, and gains in crude prices.
Meanwhile, the US dollar posted gains against all G10 currencies except the CAD, as figures stoked hopes of a soft landing in the US economy.
US Q4 GDP grew by 3.3% year over year, compared to expectations for a 2.0% gain.
The GDP figures also helped boost the risk-on loonie, and provide some positive indicators for the Canadian economy, given that Canada sends about 75% of its exports to the United States.
The Canadian dollar also gained support today from rising crude prices, after US crude stockpiles fell by more than expected last week, rising geopolitical tensions in the Red Sea (NYSE:) and the impetus of China’s economic support measures.
However, despite today’s rebound, the loonie remains lower across the board vs. most major currencies for the week following the Bank of Canada’s warning that a downturn in the Canadian economy could deepen.
Looking ahead for the pair, analysts at ING sees below 1.3000 in the second half of 2024.
However, they “still see CAD as less attractive than other pro-cyclical currencies like NOK and AUD this year – also due to our expectations for large rate cuts in Canada.”
On a technical level for the pair, analysts at FXStreet note, “The USD/CAD is getting dragged into a technical congestion pattern on the daily candles as the 50-day and 200-day Simple Moving Averages (SMA) consolidate near 1.3500.”
“It will take significant bidding pressure to force the pair into the high side of the bearish crossover of the 50-day and 200-day SMAs.”
