USD/CAD Exchange Rate Prediction – The Dollar Surges as Yields Rise

The dollar rallied sharply against the Loonie on Monday after dropping sharply and falling near 1% for last week. U.S. yields rose sharply, pushing the yield differential in favor of the greenback. Later this week, Canada Statistics will release its unemployment report. Expectations are for a 25K increase compared to November’s robust 154K increase. The U.S. will also release its jobs data. Expectations are for a 400K increase in new jobs. This number follows the November jobs report, which showed an increase of 210K. The unemployment rate is expected to continue to decline to 4.1% from 4.2% in November.

Technical Analysis

The USD/CAD moved higher Monday. Resistance is seen near the 10-day moving average at 1.2785. Support is seen near the 50-day moving average at 1.2655. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to a lower exchange rate.