The Canadian dollar strengthened against the US dollar, pushing the exchange rate through 1.0900. Commodity linked currencies have seen support over the recent week, and crude’s challenge of $105 per barrel has helped the loonie firm up against the greenback.
Darcy Brown, managing director at Capital Markets Trading, said “the commodities-based currencies are more or less trading better of late. Some of it obviously because the euro is being sold. It’s flows being unwound relatively to euro and some other currencies that may not be trading well at the moment.”
Canada has seen positive housing starts earlier in the week, beating estimates of 185,000 by 13,000. The previous month’s housing starts were revised higher to 197,000 from 195,000. The US retail sales figure will be released prior to Thursday’s New York trading session, which are forecasted to rise .5 percent. Bank of Canada (BoC) Governor Stephen Poloz will speak that afternoon on monetary policy, which will cause movement in both currencies.
USDCAD is treading on support at 1.0860, after trending lower through a descending price channel on the 4H chart. The momentum behind the downward trend is strong with the ADX and – DMI above 26.
A breakout of the channel support could send the pair lower to price action support at 1.0840. A positive retail sales figure could spark a rebound to resistance at 1.0880.