USD/CAD higher for the third day
The Canadian dollar is near the bottom of the FX leaderboard today and is now the worst performer in 2018.
Today's decline was driven in part by a soft December wholesale trade report. Sales fell 0.5% compared to a +0.5% reading expected but the bigger driver is the general strength of the US dollar.
In the bigger picture, a handful of worries are hurting the loonie:
- The Canadian oil glut
- NAFTA negotiations, which will kick off another round 5 days from now in Mexico
- Commodity prices have softened
- Latent Canadian housing worries
- The January Canada jobs report was very soft (after a couple very strong months)
Technically, USD/CAD has been in a downtrend since peaking in May but it's right in the middle of its six-month range. A close here would be the first above the 100-day moving average since December 27.
It's now closing in on an area of resistance including the early Dec low, the Feb spike high and the 200-day moving average. That's going to be tough to crack but watch Canadian retail sales (Thurs) and CPI (Fri) for clues.
