USD/CAD fails in the first attempt to break the 2024 high

USD/CAD stalled out today right at the August high of 1.3946. A break above it would have been the highest since 2022 and not far off the highest since 2020.

The pair is has climbed relentlessly since the final week of September as the Canadian economic outlook darkened and US economic data soundly beat expectations. It’s really been as simple as two neighbours moving in opposite directions with a sprinkling of oil weakness weighing further on the loonie.

Unless it broadens and strengthens, that’s not enough to crack the range. I suspect what we will need to see is some kind election result that is USD bullish and/or negative for trade — something like a red sweep. At the same time, I see risks that disappointment in Chinese stimulus could also undermine the loonie (or maybe Beijing surprises me).

At the moment, a jump in oil prices is helping to cap the pair on a report saying Iraqi militias may strike Israel.

Earlier this week I appeared on BNNBloomberg and talked about the longer-term outlook for the loonie, as well as the election.

This article was written by Adam Button at www.forexlive.com.