USD/CAD mildly bid after Doji candle
- Yesterday's doji signals indecision in the market.
- BOC warns of unknowns of the NAFTA’s renegotiation.
- Focus on T-yields and US dollar.
The Bank of Canada (BOC) raised rates to 1.25 percent yesterday as expected, but said the uncertainty surrounding NAFTA negotiations is weighing over forecasts. Thus, USD/CAD saw two-way business before ending largely unchanged on the day.
The resulting doji candle highlights indecision in the marketplace. As of writing, the pair is mildly around 1.2445. A positive close today would confirm the bullish doji reversal.
Moreover, the odds of a positive close are high, given the uptick in the treasury yields is lifting greenback higher across the board. The two-year Treasury yield, which mimics short-term rate hike bets, rose to 2.06 percent today; its highest level since August 2007.
An upbeat US data - weekly jobless claims, housing starts and building permits - may help USD score gains. Also, the bid tone around oil has weakened on fears the rising shale output could overshadow OPEC-led output cuts. Hence, CAD bulls may find it difficult to penetrate previous day's low of 1.2362.
USD/CAD Technical Levels
A break above 1-hour 200-MA of 1.2461 would open doors for 1.25 (zero levels) and 1.2531 (previous day's high). On the downside, breach of the session low of 1.2426 could send the pair down to 1.2397 (Jan. 16 low) and 1.2362 (previous day's low).