Canadian Dollar looking for recovery ahead of BoC’s Macklem, hampered by softening Crude Oil

• Canadian Dollar flows try to stage a rebound after last week’s declines.
• Bank of Canada Governor Tiff Macklem hits newswires later on Monday.
• Weaker bids on Crude Oil limits CAD upside.

The Canadian Dollar (CAD) is hunting for some green territory against the US Dollar USD to kick off the new trading week. The Loonie’s topside remains limited as Crude Oil prices fall back, limiting momentum in the Oil-dependent CAD. 

Bank of Canada (BoC) Governor Tiff Macklem will testify before the Canadian federal government’s Standing Senate Committee on Finance later today. The BoC head is expected to land hawkish, while also awaiting “clear evidence” that inflation in Canada will return to the BoC’s target level of 2%.

Daily Digest Market Movers: Canadian Dollar attempts to stage Monday recovery

• The CAD is trying to claw back chart paper after dipping into a new eight-month low last week.
• BoC’s Governor Macklem to testify before the federal financial oversight committee today.
• Round 2 of Governor Macklem’s testimony is slated for Wednesday.
• Governor Macklem broadly expected to shy away from direct questions about rate cuts and defend the BoC’s tightening stance.
• Despite weakening economic data, inflation risks remain elevated for Canada.
• Macklem expected to reiterate that the BoC does not see a recession coming, despite the path to a soft landing having narrowed recently.
• Crude Oil prices look soft for Monday as geopolitical tensions from the Gaza Strip conflict remain contained in the region.
• WTI Crude Oil bids are down around 3% for the day.
• Weakening barrel bids are limiting CAD upside.
• Loonie traders will want to keep an eye out for Canadian Gross Domestic Product (GDP) figures on Tuesday.

Technical Analysis: Canadian Dollar trying to extend a rebound over 1.2850 against the US Dollar

The Canadian Dollar (CAD) is catching a relief bid from last Friday’s eight-month low against the US Dollar (USD), sending the USD/CAD pair back below 1.3850 after tapping 1.3880 late last week.

An extended recovery in the Loonie from here will see 1.3850 firming up into a significant technical resistance level moving forward. On the top side, a bullish break will see the USD/CAD set to challenge 2022’s high of 1.3978 set over one year ago, back in mid-October of last year.

In the meantime, a downside continuation will run into technical support from the 50-day Simple Moving Average (SMA), which is currently lifting north of the 1.3600 handle, with the last swing low pricing in an interim floor from 1.3569.

Long-term support sits at the 200-day SMA currently parked just below 1.3500.

USD/CAD Daily Chart