USD/CAD Outlook: Finance Minister’s Exit Shakes Loonie…

• The Canadian greenback fell after Finance Minister Chrystia Freeland out of the blue resigned.

• The loonie fell as oil costs dropped amid demand issues.

• Knowledge within the earlier session confirmed a pointy enchancment in US service sector enterprise exercise.

The USD/CAD outlook exhibits a weakening Canadian greenback after the Finance Minister’s resignation and falling oil costs, whereas the U.S. greenback stays robust as markets anticipate fewer Fed price cuts in 2025.

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The Canadian greenback fell after Finance Minister Chrystia Freeland out of the blue resigned, inflicting political uncertainty. The Minister resigned after clashing with Prime Minister Justin Trudeau on coverage. Canada’s economic system faces a whole lot of uncertainty after excessive rates of interest harm demand. Because of this, the Financial institution of Canada has lowered borrowing prices a number of instances this yr, weighing on the loonie. Political uncertainty will solely add to the clouded outlook for the economic system, additional hurting the Canadian greenback. 

On the identical time, the loonie fell as oil costs dropped amid demand issues. Knowledge confirmed weak client spending in China, the most important oil client. Poor knowledge from the nation dims the outlook for world oil demand. 

In the meantime, the US greenback held regular after knowledge within the earlier session confirmed a pointy enchancment in service sector enterprise exercise. The resilient economic system has prompted merchants to decrease bets for Fed price cuts within the coming yr. Nonetheless, markets anticipate the Fed to chop charges this week. 

USD/CAD key occasions right now

• Canada CPI m/m
• Canada median CPI y/y
• Canada trimmed CPI y/y
• US core retail gross sales m/m
• US retail gross sales m/m

USD/CAD technical outlook: RSI signifies stalled bullish momentum

On the technical aspect, the USD/CAD value has ascended to a brand new excessive within the uptrend. The value trades nicely above the 30-SMA with the RSI close to the overbought area. Bulls have been within the lead for some time and not too long ago broke above the 1.4200 key resistance stage. The subsequent hurdle is on the 1.4301 key stage. 

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Nevertheless, the RSI has stalled as the worth has made new highs, indicating weaker enthusiasm amongst bulls. Due to this fact, USD/CAD would possibly battle to transcend the 1.4301 key stage. On the identical time, a bearish divergence would sign a reversal. Nevertheless, the development will solely reverse if the worth breaks under the 30-SMA and the RSI dips under 50.

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