Where we are: USD/CAD is currently trading at 1.3825, up 0.11% on the day, after trading in a 1.3804-1.3840 range. The pair is pushing towards recent six-week highs, reflecting persistent CAD weakness. The move higher extends the grind from yesterday’s close near 1.3810 as Canadian Dollar bears seize control.
What’s driving it: The Canadian dollar is under pressure due to the combination of a dovish Bank of Canada and a sharp decline in oil prices. Macklem’s recent remarks highlighting tariff uncertainty and a softer growth path keep the door open for future easing, despite headline CPI remaining above the BoC’s target. Adding further weight, WTI crude has cratered over 5% today, plummeting below $89, eroding a key support for the Loonie.
- The Bank of Canada held its overnight rate at 2.75% on April 16th, citing tariff uncertainty and softer growth.
- WTI Crude is down 5.14% today, trading at $88.69, a substantial headwind for the commodity-linked currency.
- Net non-commercial CAD positioning is modestly short at -31,231 contracts, leaving room for further downside before squeeze risk materialises.
NY session focus: All eyes will be on USD/CAD resistance at 1.3850. Any upside surprise in upcoming US data could push the pair higher, potentially testing the 1.3900 level. Traders will monitor US yields and the DXY for further cues. Watch 08:30 ET US data for signs of further economic resilience. The current trade is clearly short CAD, but the pain trade would be a sharp rebound in oil prices alongside a hawkish surprise from the BoC, forcing a short squeeze back towards 1.3700.