USD/CAD bears run into key daily support, correction eyed

The move into previous support that fulfils a 61.8% ratio is what the USD/CAD bulls eye. On the horizon is Tuesday’s budget due date for Canada. As the commodity complex picks up a bid, which is reducing stress in the banking industry and fueling an increase in oil prices, USD/CAD experienced its worst decline in two weeks.

The USD/CAD currency pair was down about 0.6%, moving from a high of 1.3745 to a low of 1.3649 thus far today. It is y trading at 1.3662 at the time of writing. First Citizens BancShares’ announcement that it will assume the savings and loans of the defunct Silicon Valley Bank calmed the financial system and encouraged a risk-taking attitude. In addition, the price of oil, a significant Canadian export, ended the day 5.1% higher at $72.18 per barrel on expectations that problems in the banking sector would be limited, which boosted the Canadian dollar.

The budget for Canada is expected on Tuesday, according to the calendar. According to a senior government source with knowledge of the paper, it would include a method to lock in future carbon credit pricing, a move aimed to promote investments by giving businesses assurance to develop low-carbon technologies. The January GDP is expected to be higher than the flash estimates of +0.4%, according to TD Securities analysts. Broad-based growth is anticipated, with the exceptionally mild weather acting as a tailwind.

Although financial stability worries currently take precedence, a 0.4% print would show that Q1 GDP is trending well above BoC expectations. The price is approaching support, which opens the possibility of a move into earlier support that satisfies a 61.8% ratio.