USD/CAD climbs following US economic data

The USD/CAD aims higher and tests a significant resistance trendline in the daily chart. The latest FOMC minutes suggested that the Fed will continue to hike rates. In addition; positive US economic data underpinned the US Dollar and bolstered the USD/CAD.

Rising oil prices capped the USD/CAD rally on Thursday. The USD/CAD clash with a four-month-old downslope resistance trendline, gaining 0.15% daily. At the time of writing, the USD/CAD exchanges hands at around 1.3576.

USD/CAD to continue upwards on Fed and BoC policy divergence. Wall Street continues to pare some of its losses. The US Dollar is gaining some traction as the Fed is ready to continue tightening monetary conditions, as revealed by the Fed’s last meeting minutes.

The minutes showed a slightly hawkish tone as a few officials advocated for a 50 basis point increase in interest rates, but ultimately, they all agreed on a 25 basis point hike. Officials commented that the labor market remains tight and added that growth risks are tilted to the downside.

The US Bureau of Labour Statistics (BLS) revealed that unemployment claims for the week ending on February 18 came at 192K, below last week’s 194K and lower than the 200K expected. Gross Domestic Product (GDP) in the US expanded in the fourth quarter by 2.7%, shy of the first estimate of 2.9%.

On the Canadian front, Average Weekly Earnings eased from 4% to December’s 3.4% YoY. It was the 19th month of growth, with 17 of the 20 sectors reporting gains.

The USD/CAD pair might continue to edge higher. Divergence in monetary policy between the Fed and the Bank of Canada (BoC) warrants further upside in the pair. The BoC announced that it would pause, while Fed officials had stated the need for higher for longer. Therefore, USD/CAD upside is expected.